🚫 Glencore Rejected

Oil shares surged on Sunday’s OPEC+ announcement, Glencore had a monster $23bn bid rejected by Teck, some of Hyve’s shareholders are planning a mutiny and the outlook for UK dealmaking remains downbeat.

April 04, 2023

Good morning. In today’s update - oil shares surged on Sunday’s OPEC+ announcement, Glencore had a monster $23bn bid rejected by Teck, some of Hyve’s shareholders are planning a mutiny and the outlook for UK dealmaking remains downbeat.

Markets

A mixed day for UK equities on Monday, with the heavyweight FTSE 100 propped up by oil giants benefitting from the OPEC+ announcement on Sunday - Shell (+4.2%) and BP (+4.3%) both ended well ahead. Airlines (who naturally benefit from lower oil prices), found themselves in the red after a positive few days - IAG (-2.3%), Easy Jet (-1.2%) and Wizz Air (-4.8%) all suffered. Overall, the FTSE 100 closed +0.5% higher whilst the FTSE 250 edged down -0.3%.

Top Stories

🚫 Glencore‘s $23bn approach rejected by Teck

The US-listed natural resources firm announced on Monday they had rejected an “opportunistic” unsolicited offer from UK giant Glencore. The spiky response said a tie up with Glencore would destroy shareholder value, leaving shareholders “exposed” to a number of risks. Teck’s majority shareholder (the Keevil family) was fully on board with the rejection, claiming “now is not the time” for the deal. The all-share offer valued Teck at $22.5bn and represented a 20% premium for shareholders. Glencore shares closed down 2.6% on the news.

✋  Hyve shareholders plan mutiny against Providence £481m acquisition

A number of Hyves’s top investors are planning to vote against the offer, despite the Board recommending shareholders accept the bid. M&G, one Hyve’s largest shareholders, told the FT that Providence’s £481 offer “materially undervalues” the company, despite the bid representing a 40% premium on the share price before it was announced. M&G may have a point - Hyve shares still trade around 90% lower than pre-pandemic levels and the asset manager likely feels there is more recovery left in the tank.

🏛️ Gloomy outlook for UK investment banks

A number of UK-focussed investment banks reported earnings on Monday and there was one common theme - a lack of activity. Numis - the largest of the domestically-focussed advisers - reported a 14% drop in revenues for the last six months and warned they did not foresee a “meaningful” change to market conditions in the short term. Peel Hunt, who went public in September 2021 (with shares down around 50% since), echoed sentiment and cautioned that execution risk “remained high”, despite seeing a gradual improvement over the last few weeks. On the bright side, the UK is not alone - global deal volumes are at a 10-year low in 2023 according to the FT, owing to a cocktail of macroeconomic headwinds. (Official - Numis, PH)

What Else Happened?

Economics / Politics / General

UK manufacturing activity slipped back in March after a hopeful February; on the upside - cost pressures eased to the lowest level since June 2020.

Teachers belonging to the National Education Union voted against the latest pay offer on Monday, signalling a fresh round of school strikes.

Deals

Blackstone and Industrials REIT jointly announced they had agreed terms on a £700m deal for the London-listed real estate investment trust; on a less positive note - Blackstone separately reported another limit on investor redemptions for its own real estate income trust after a flurry of withdrawal requests in March.

Troubled cinema chain Cineworld announced on Monday it had failed to find a bidder for its US, UK and Ireland businesses; a restructuring will now see lenders take equity in the business.

We’ve heard plenty of examples of companies moving abroad, but this French AI company is migrating to our shores to “seize on growth opportunities in the UK”.

4.screen, a startup looking to bring advertisements to your car windscreen, has reportedly secured $21m funding from tyre giant Continental and Sir Martin Sorrell’s VC fund.

A group of universities in the midlands including University of Birmingham and Loughborough announced intentions to create a £250m venture fund to support uni spinouts.

Acre - the startup developing an all-in-one platform for mortgage advisers - announced a fresh £6.5m capital raise on Monday, adding Starling Founder Harold McPike to the cap table along with existing investors Aviva and Founders Factory.

Company News / Trading Updates

The UK government has decided to extend plans to sell down its stake in Natwest, which currently stands at 41.1%, likely as a result of recent banking turmoil.

WANdisco, the listed tech company who discovered fraudulent activity just weeks after eyeing a potential move to the US, announced the departures of their CEO and CFO on Monday.

🌎 Global Snapshot

WWE and UFC owner Endeavor have joined forces for a $21bn sports mega-merger, to be led by current Endeavor CEO Ari Emanuel.

In the latest clash between Disney and the state of Florida - CEO Bob Iger called efforts by DeSantis to restrict the media company’s autonomy over the land surrounding their Orlando resort “anti-business”

Germany became the latest country to float the idea of banning ChatGPT over data protection concerns, following in Italy’s footsteps

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