2024 The Year of Takeovers
Part 1 - Takeovers on the FTSE 100 in 2024
Dear reader,
Wishing you a Merry Christmas when it arrives. Hope everyone takes the time to enjoy this brilliant time of the year to spend with family, friends, and loved ones
I myself will be spending it with my family and have been battling it in the shops just to get a bottle of wine!
Anyway, as the year closes in, it's the perfect time to reflect on the takeovers on the FTSE 100 that help to show just how undervalued the FTSE is!
Anglo American - Unsuccessful
In May 2024, BHP Group (BHP), one of the world’s largest mining companies, attempted to acquire Anglo American. The bid process was marked by several proposals and a tense negotiation period:
BHP's Initial Offer:
In April 2024, BHP submitted an initial all-share (scrip) proposal valued at £31.1 billion ($39 billion).
Anglo American rejected the bid, stating it undervalued the company.
BHP's Revised Offers:
May 13, 2024: BHP increased its bid to £34 billion ($42.67 billion). Anglo again rejected this offer, citing a significant undervaluation of its long-term potential.
May 20, 2024: BHP made a third and final offer. Anglo rejected this as well, reiterating that the proposal failed to reflect the company's strategic growth prospects.
BHP’s Reasons for Pulling Out:
The process ended with BHP withdrawing its bid, citing:
The need to maintain capital discipline.
Concerns about South African regulatory risk and higher operating costs.
Being denied access to key information from Anglo American during negotiations.
Anglo American’s Response:
Anglo justified its stance by highlighting its ability to generate greater shareholder value independently through:
A simpler portfolio of assets focusing on high-margin and growth commodities.
Operational improvements and cost reductions of $1.7 billion annually.
Significant growth opportunities in copper, premium iron ore, and crop nutrients.
Darktrace - Successful
In 2024, Darktrace was the target of an all-cash acquisition bid from Thoma Bravo, a leading private equity firm specializing in technology investments.
Initial Offer:
In April 2024, Thoma Bravo proposed a deal to acquire Darktrace for approximately $5.32 billion (£4.25 billion).
The cash offer valued Darktrace at $7.75 (£6.20) per share, which represented a 44% premium over the company’s average stock price during the previous three months.Revised Offers:
Thoma Bravo maintained its offer at the same valuation, and Darktrace’s board of directors, along with a majority of shareholders, ultimately accepted the proposal.Finalization of the Deal:
After receiving approval, Darktrace’s shares were delisted from the London Stock Exchange, and the company officially exited the FTSE 100 Index. The acquisition marked the transition of Darktrace from public to private ownership under Thoma Bravo’s portfolio.Darktrace’s Response:
Darktrace emphasized the strategic value of the offer, noting that the acquisition provided an opportunity to maximize shareholder value. The company’s leadership focused on the growth opportunities in AI-driven cybersecurity, which continues to be a rapidly expanding market.
DS Smith- In Progress
Details of the Takeover Bid
In 2024, DS Smith agreed to a £5.8 billion takeover offer from International Paper, a US-based industrial conglomerate with significant interests in packaging and recycling.
Initial Offer:
In April 2024, International Paper made an offer to acquire DS Smith for £5.8 billion. The offer was priced at £4.50 per share, valuing DS Smith at approximately £6 billion.Revised Offers:
Negotiations have proceeded smoothly, with DS Smith’s CEO, Miles Roberts, confirming that the merger work with International Paper was progressing “absolutely full steam.” Despite concerns over a potential rival bid from Brazil’s Suzano, Roberts expressed confidence that the deal would complete successfully.Outcome and Challenges:
The deal is still in progress, but it faces potential disruption from external factors. Specifically, Suzano, a major player in the packaging sector, is reportedly considering an acquisition of International Paper, which could lead to the termination of the DS Smith deal if the acquisition proceeds.DS Smith’s Response:
DS Smith’s leadership has remained optimistic about the deal, citing the ongoing merger discussions with International Paper as key to the company’s future growth. The takeover is seen as an opportunity to expand DS Smith’s global reach in the packaging industry, particularly in sustainable and recyclable packaging solutions.
Hargreaves Lansdown- In Progress
Details of the Takeover Bid
In 2024, Hargreaves Lansdown agreed to a £5.4 billion takeover by a consortium of international asset managers and private equity firms, including CVC Capital Partners, Nordic Capital, and a subsidiary of the Abu Dhabi Investment Authority.
Initial Offer:
In early 2024, the consortium made an offer to acquire Hargreaves Lansdown for £11.40 per share, valuing the company at approximately £5.4 billion. The offer represents a premium over the company’s previous trading price, though concerns have been raised about the valuation being too low.Revised Offers:
The consortium’s initial offer of £9.85 per share was rejected by Hargreaves Lansdown, prompting further negotiations. After several rounds of discussions and two extensions, the latest offer of £11.40 per share was recommended by the board, subject to shareholder approval. The deal will result in a windfall for the company’s founders, Peter Hargreaves and Stephen Lansdown, who hold significant stakes in the company, worth almost 20% and 5.7%, respectively.Outcome and Challenges:
The deal is still in progress, with no definitive resolution yet. Regulatory approval may present challenges due to the consortium’s global scope and the potential impact on competition in the UK’s retail investment market. The outcome will largely depend on shareholder confidence in Hargreaves Lansdown’s ability to continue its growth independently versus the benefits of being part of a larger, global investment group.
Rightmove- Unsuccessful
Details of the Takeover Bid
Rightmove, the UK’s leading property portal, rejected a £6.2 billion takeover bid from REA Group in 2024. The final offer included 346 pence in cash, 0.0417 new REA shares, and a 6 pence special dividend per share. The board deemed the bid undervalued the company and declined further engagement. REA subsequently withdrew its offer.
Bidder: REA Group, an Australian-based digital property portal company, majority-owned by Rupert Murdoch's News Corp. REA Group operates property platforms in Australia and Asia and has been looking to expand its presence in the UK market.
Offer Price: REA made a final offer consisting of 346 pence in cash, 0.0417 new REA shares, and a special dividend of 6 pence per share, valuing Rightmove at 781 pence per share. This offer valued Rightmove at approximately £6.2 billion.
Outcome: Rejected by Rightmove’s board.
Rejection: Rightmove’s board rejected the offer, stating that the bid “fundamentally undervalued” the company. Rightmove also declined REA’s request for access to due diligence and refused to extend the deadline for making a firm offer. On 30 September, REA confirmed it would withdraw its bid.
Background: REA’s bid came after several earlier offers, including one valuing the company at £6.1 billion. Despite REA's efforts, including a request to extend the deadline, Rightmove remained firm in rejecting the proposal. REA stated that the combination would have provided Rightmove shareholders with the opportunity to participate in a fast-growing global platform, while offering value certainty in a market challenged by increased competition.
Thanks for reading! Join me next time as we look at the FTSE 250 takeovers!
Merry Christmas,
Ollz
The information provided in this article is for informational purposes only and reflects my personal opinions and analyses. It should not be considered financial advice or a recommendation to buy or sell any securities. Investing in the stock market involves risks, and past performance is not indicative of future results. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. I do not assume any responsibility for any financial losses or consequences that may arise from reliance on the information provided herein.
Last year it felt like a takeover was a potential catalyst for every listed company but valuations were too favourable.