Royal Mail owner backs takeover, Pets at Home profits fall, blue-chips slightly lower

Royal Mail owner IDS today backed a £3.5 billion takeover by Czech billionaire Daniel Kretinsky.

The agreement with West Ham part-owner Kretinsky follows his company’s undertakings to protect Royal Mail’s “critical functions”.

In other City developments, BHP has asked to extend the Anglo American bid timeline and Pets at Home has posted lower profits.

FTSE 100 Live Wednesday

• Royal Mail owner backs takeover

• BHP wants more time on Anglo bid

• Pets at Home profits fall

Fresnillo and oil giants support weaker FTSE 100, IDS shares up to 330p

08:43 , Graeme Evans

Gains of 1% for BP and Shell after Brent Crude rose to $84 a barrel have failed to prevent the FTSE 100 index dropping another 18.18 points to 8236.

The best performing stock is Mexico-based gold and silver miner Fresnillo, which is up 3% or 19p to 633p.

Components supplier RS Group is down 3% or 21.5p to 732p at the top of the FTSE 100 fallers board, with Ocado not far behind.

National Express business Mobico is down 4% among the biggest fallers in the FTSE 250 index, which is down 25.08 points to 20,680.19.

Royal Mail owner IDS rose 3% or 8.8p to 330p, matching its 2013 IPO price but short of the 370p a share agreement with Czech billionaire Daniel Kretinsky.

BHP calls for more time on its £39 billion bid for Anglo American

07:44 , Michael Hunter

The potential £39 billion mega merger in London’s mining sector took a new twist today, with BHP calling for a second deadline extension for Anglo American to consider backing its bid.

A formal offer from the Australian suitor for the FTSE 100 miner is due by 5pm today under rules known as “put up or shut up” in the City, which leave a set period of time between an approach and a formal offer.

BHP is ken to secure backing from Anglo’s board for the deal before it formalises the approach for what would be the biggest deal ever in the mining sector and the largest deal in London for years.

The terms of the deal, which have been discussed by the two firms, include spinning off Anglo’s South African assets, which has caused controversy there. Anglo was set up in the Johannesburg in 1917, giving it deep roots in the country.

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As BHP called for the extension today, it said such a move would “allow for further engagement on the proposal”.

Those include “a range of socioeconomic measures intended to address Anglo American’s concerns” it said, adding:

“BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals.

“BHP has considered market precedent transactions and believes that the risks are quantifiable and manageable.  BHP has already factored the costs associated with these risks into the offer ratio of its proposal.”

Darktrace and Vistry set for promotion in FTSE 100 reshuffle

07:44 , Graeme Evans

Ocado and St James’s Place are in danger of losing their places in the FTSE 100 index, with takeover target Darktrace and the building firm Vistry poised to replace them.

June’s quarterly reshuffle of London’s top flight and the FTSE 250 index is based on next Tuesday’s closing prices, with index provider FTSE Russell confirming the changes the following evening.

Current valuations also suggest that National Express owner Mobico and the Ukraine-based iron ore pellets supplier Ferrexpo will be relegated from the FTSE 250 index.

In a separate development, FTSE Russell has announced that Hargreaves Lansdown will rejoin the FTSE 100 index at the end of this week.

The investment platform will take the place of Flutter Entertainment after the gaming firm switched its primary listing to the New York stock exchange.

FTSE 100 under pressure but US technology stocks rally

07:21 , Graeme Evans

Investors are facing another downbeat session, with FTSE 100 futures pointing to a decline of 23 points on top of yesterday’s fall of 0.8% to 8254.

The pressure follows a mixed session on Wall Street after healthcare and consumer stocks led to the Dow Jones Industrial Average dropping 0.6%.

The S&P 500 index finished broadly flat due to the support of semiconductor and other technology stocks as the Magnificent Seven surged by 1.3%.

The Nasdaq Composite finished 0.6% higher at a fresh record but Asia markets were weaker this morning after Australia’s inflation rate increased by more than expected to 3.6%.

Oil prices have continued to pick up ahead of this weekend’s OPEC+ meeting, with Brent Crude trading near to a four-week high at $84.40 a barrel.

Profits down at Pets at Home

07:18 , Simon English

Pets at Home profits are down 14% to £106m in a “pivotal year” as its digital platform was launched to customers.

Despite a cost-of-living crisis, demand for pet products was “resilient” as a nation of pet lovers continued to pamper their cats and dogs.

CEO Lyssa McGowan said: “We know the nation’s pets better than anyone else, with over 10 years of analytical data on 10 million pets, and we now have a best-in-class digital platform.”

For investors, there will be another £25 million share buyback, on top of £100 million over the last two years.

McGowan said 2024, “has been a pivotal year for the business, having delivered some key building blocks of our platform for long term growth.”

The final dividend is held at 8.3p.

The company believes its new app and website have “transformed” the shopping and subscription experience.

Czech billionaire to buy Royal Mail owner IDS

07:11 , Daniel O’Boyle

Royal Mail owner International Distribution Services will be taken over by Czech billionaire Daniel Kretinsky after agreeing a £3.5 billion deal.

The acquisition will take Royal Mail’s parent company off  the London stock market 11 years after it was privatised.

West Ham part-owner Kretinsky, via his EP Group business, first made an approach to buy IDS in April, and the IDS board had said they were “minded to” accept a bid at the price agreed today if one came in.

Keith Williams, the Chair of IDS, said: “IDS has the potential to become a leading international logistics player. Both the IDS Board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.

Because of the “critical functions” performed by Royal Mail, EP has agreed on certain undertakings with the UK Government, including that the business will remain the country’s Universal Service Provider for the next five years.

06:43 , Simon Hunt

Good morning from the Standard City Desk.

It was a fascinating — and long — mea culpa yesterday from top London stock picker Nick Train, director of Lindsell Train, which manages the portfolio for the listed Finsbury Growth & Income Trust.

The trust invests largely in UK equities, three cheers for that, but has underperformed its benchmark, the FTSE All-Share Index, over the six months to the end of March.

No wonder Mr Train admitted that his half-year review was “difficult” to write. No one likes to be the bearer of bad news, not least to investors. The review starts with an expression of frustration at “the malaise gripping the UK Equity market”.

But Train is a believer in the fundamental strength, potential and investment cases of a number of British-based businesses. Where, he admits, he went badly wrong was being under-invested in Britain’s quoted tech sector — yes it does exist — as well as “world class” British brands.

As a result he has bet heavily on three stocks, Experian, Rightmove and Fever-Tree. Consequently, the allocation to tech or data companies has grown from 30% to 55%, with other big holdings in RELX, Sage and, of course, the Stock Exchange’s owner LSEG.

It is a big punt but Train is convinced that there are world-class and heavily undervalued London-listed companies out there, rubies in the rubble if you like. After the strong run the London market has enjoyed over recent weeks, it is surely nailed on that Train will find it far more enjoyable writing his full-year review.

And if he can convince his fellow fund managers that they do not have to stampede over to America for the best returns from tech then perhaps there is hope for the London market yet.

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Here’s a summary of our top headlines from yesterday: