25^th April 2024

• London-listed Anglo American has been approached by larger rival BHP about a multi-billion-dollar takeover offer.

• It would be one of the mining industry’s biggest mergers in years.

• It raises fresh concerns about an exodus of UK firms from London.

Susannah Streeter, head of money and markets, Hargreaves Lansdown: “The buyout offer from BHP, the world’s largest publicly listed miner, for Anglo American, won’t just shake up the mining industry, but will send a fresh chill through the City of London. There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange. It comes hot on the heels of speculation that Shell might up sticks and leave for New York, rumours that Ocado may be considering leaving for the Big Apple, and follows the crushing disappointment of home-grown chip designer Arm choosing the Nasdaq over the FTSE 100.

The FTSE 100 may have raced to fresh highs this week, but it’s been a long time coming, and UK-listed companies are still considered to be undervalued. Anglo American’s share price is down around 10% compared to a year ago, which is likely to have helped spark the offer. The premium offered by overseas buyers swooping on London-listed firms is seen as evidence that UK assets are still cheap, having been languishing as a result of the Brexit-effect and the sluggish performance of the UK economy.

Although listing reforms are in process, and a charm offensive has been launched by the government to lobby more firms to list in London, pressure is likely to pile up for more concerted action to be taken. A cut to stamp duty on share purchases from the current level of 0.5% would be a first welcome step. It would help spur interest into owning slices of companies and give the LSE more of a fighting chance compared to its international peers.”