For Immediate Release
Chicago, IL – June 3, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Eli Lilly and Company LLY, T-Mobile US, Inc. TMUS, BHP Group Limited BHP, American International Group, Inc. AIG and Exelon Corporation EXC.
Here are highlights from Friday’s Analyst Blog:
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Eli Lilly and Company, T-Mobile US, Inc. and BHP Group Limited. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today’s research reports here >>>
Eli Lilly’s shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+41.5% vs. +15.9%). The company boasts a solid portfolio of core drugs for diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Mounjaro, Verzenio, Jardiance, Taltz and others.
Lilly’s new tirzepatide medicines, diabetes drug Mounjaro and obesity medicine, Zepbound, are seeing exceptionally strong demand trends. Lilly has also launched some other new products like Omvoh and Jaypirca. Mounjaro, Zepbound and other new products are expected to drive Lilly’s top line in 2024. Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s.
However, generic competition for some drugs, rising pricing pressure and challenges in meeting strong demand for incretin products like Zepbound and Mounjaro are some top-line headwinds.
(You can read the full research report on Eli Lilly here >>>)
Shares of T-Mobile have outperformed the Zacks Wireless National industry over the past year (+23.7% vs. +21.3%). The company continues to boast a leadership position in the 5G market. It's 5G network covers 98% of Americans, or around 330 million people in the country.
T-Mobile inked a definitive agreement to acquire U.S. Cellular’s wireless operations, along with 30% of its spectrum assets. The transaction is likely to facilitate a competitive market with increased options and enable T-Mobile to expand its fast-growing home broadband and fixed wireless offerings. Healthy demand for postpaid services is a tailwind.
However, the highly competitive and saturated U.S. telecom market lowers its growth potential. The residual value of the surrendered phones, which the companies look to sell in other markets, may induce liquidity risk if the plan falls apart. The rising debt burden negatively impacts investors' confidence.
(You can read the full research report on T-Mobile here >>>)
BHP’s shares have gained +11.7% over the past year against the Zacks Mining – Miscellaneous industry’s gain of +21.9%. The company can witness potential rebound in iron ore prices driven by infrastructure demand in the United States and the automotive sector. The demand for electric vehicles is expected to support copper and nickel prices.
BHP’s investment in projects focused on future-facing commodities like copper, nickel and potash will aid growth. Its efforts to improve operational efficiency through technology will also continue to boost margins.
However, BHP’s fiscal 2024 iron ore production guidance is 254-264.5 Mt, indicating 1% year-over-year growth at the midpoint. Copper production is expected to grow 5.7% to 1,720-1,910 kt, while nickel is projected to increase 2.5% to 77-87 kt. Iron ore prices have been on a downtrend recently due to weaker-than-expected demand in China. The contraction in the manufacturing sector has weighed on copper prices.
(You can read the full research report on BHP here >>>)
Other noteworthy reports we are featuring today include American International Group, Inc. and Exelon Corporation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Exelon Corporation (EXC) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report
American International Group, Inc. (AIG) : Free Stock Analysis Report
T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report
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VANCOUVER, BC / ACCESSWIRE / June 3, 2024 / Stillwater Critical Minerals Corp. (TSX.V:PGE)(OTCQB:PGEZF)(FSE:J0G) (the "Company" or "Stillwater") is pleased to announce the appointment of Mr. Bradley Adamson as an Independent Director.
Mr. Adamson is a veteran resource industry professional with over 25 years of global experience focused on nickel and cobalt in Canada, Africa, Brazil and Australia with Glencore PLC, where he leads Business Development for Glencore's nickel group. He has led and been involved with many of Glencore's nickel divestments, mergers and acquisitions and has held various board positions for the group.
He holds a Bachelor of Engineering in Minerals Engineering from the Western Australian School of Mines along with a Post Graduate Diploma in Applied Finance from Kaplan Professional. He began his career with WMC Resources followed with periods at Anaconda Operations and BHP Billiton. He joined Glencore in 2004 and has developed a strong operational, project development and commercial background over the subsequent 20 years with the group.
Stillwater Critical Minerals President & CEO, Michael Rowley commented, "We are very pleased to announce the appointment of Bradley Adamson as Glencore's appointee to the Stillwater board of directors. Bradley brings extensive corporate experience in global mining and mine finance in addition to his strong background in nickel and cobalt metallurgy to our work in the Stillwater Igneous Complex, one of the world's most iconic magmatic formations. We look forward to providing further updates including additional drill results as we continue to advance our flagship Stillwater West critical minerals project towards its potential as a primary US-based source of battery and catalytic metals."
Warrant Extension
The Company further reports that it has applied for TSX Venture Exchange approval to extend the expiry date on certain warrants that are due to expire June 16, 2024 (the "Warrants"). Per the application, 7,406,250 Warrants that were originally issued as part of a financing completed in June 2021 (see news release June 16, 2021) will be extended to a new expiration date of June 16, 2025. Each Warrant entitles the holder to acquire one common share at an exercise price of CDN$ 0.55.
About Stillwater Critical Minerals Corp.
Stillwater Critical Minerals (TSX.V:PGE)(OTCQB:PGEZF)(FSE:J0G) is a mineral exploration company focused on its flagship Stillwater West Ni-PGE-Cu-Co + Au project in the iconic and famously productive Stillwater mining district in Montana, USA. With the addition of two renowned Bushveld and Platreef geologists to the team and strategic investments by Glencore, the Company is well positioned to advance the next phase of large-scale critical mineral supply from this world-class American district, building on past production of nickel, copper, and chromium, and the on-going production of platinum group, nickel, and other metals by neighboring Sibanye-Stillwater. An expanded NI 43-101 mineral resource estimate, released January 2023, positions Stillwater West with the largest nickel resource in an active US mining district as part of a compelling suite of nine minerals now listed as critical in the USA. To date, five Platreef-style nickel and copper sulphide deposits host a total of 1.6 billion pounds of nickel, copper and cobalt, and 3.8 million ounces of palladium, platinum, rhodium, and gold at Stillwater West. All deposits remain open for expansion along trend and at depth. Results are pending from resource expansion drilling completed in the fall of 2023.
Stillwater also holds the high-grade Black Lake-Drayton Gold project adjacent to Treasury Metals' development-stage Goliath Gold Complex in northwest Ontario, currently under an earn-in agreement with Heritage Mining, and the Kluane PGE-Ni-Cu-Co critical minerals project on trend with Nickel Creek Platinum‘s Wellgreen deposit in Canada‘s Yukon Territory.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Michael Rowley, President, CEO & Director – Stillwater Critical MineralsEmail: info@criticalminerals.com Phone: (604) 357 4790Web: http://criticalminerals.com Toll Free: (888) 432 0075
Forward-Looking Statements
This news release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts including, without limitation, statements regarding potential mineralization, historic production, estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, and future plans and objectives of the company are forward-looking statements that involve various risks and uncertainties. Although Stillwater Critical Minerals believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include failure to obtain necessary approvals, unsuccessful exploration results, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, uninsured risks, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same, and other exploration or other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral exploration and development of mines is an inherently risky business. Accordingly, the actual events may differ materially from those projected in the forward-looking statements. For more information on Stillwater Critical Minerals and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Stillwater Critical Minerals
View the original press release on accesswire.com
Friday, May 31, 2024The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Eli Lilly and Company (LLY), T-Mobile US, Inc. (TMUS) and BHP Group Limited (BHP). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today’s research reports here >>>Eli Lilly shares have outperformed the Zacks Large Cap Pharmaceuticals industry over the year-to-date period (+41.5% vs. +15.9%). The company boasts a solid portfolio of core drugs for diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Mounjaro, Verzenio, Jardiance, Taltz and others.Lilly’s new tirzepatide medicines, diabetes drug Mounjaro and obesity medicine, Zepbound, are seeing exceptionally strong demand trends. Lilly has also launched some other new products like Omvoh and Jaypirca. Mounjaro, Zepbound and other new products are expected to drive Lilly’s top line in 2024. Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s.However, generic competition for some drugs, rising pricing pressure and challenges in meeting strong demand for incretin products like Zepbound and Mounjaro are some top-line headwinds.(You can read the full research report on Eli Lilly here >>>)Shares of T-Mobile have outperformed the Zacks Wireless National industry over the past year (+23.7% vs. +21.3%). The company continues to boast a leadership position in the 5G market. It's 5G network covers 98% of Americans, or around 330 million people in the country.T-Mobile inked a definitive agreement to acquire U.S. Cellular’s wireless operations, along with 30% of its spectrum assets. The transaction is likely to facilitate a competitive market with increased options and enable T-Mobile to expand its fast-growing home broadband and fixed wireless offerings. Healthy demand for postpaid services is a tailwind.However, the highly competitive and saturated U.S. telecom market lowers its growth potential. The residual value of the surrendered phones, which the companies look to sell in other markets, may induce liquidity risk if the plan falls apart. The rising debt burden negatively impacts investors' confidence.(You can read the full research report on T-Mobile here >>>)BHP shares have gained +11.7% over the past year against the Zacks Mining – Miscellaneous industry’s gain of +21.9%. The company can witness potential rebound in iron ore prices driven by infrastructure demand in the United States and the automotive sector. The demand for electric vehicles is expected to support copper and nickel prices.BHP’s investment in projects focused on future-facing commodities like copper, nickel and potash will aid growth. Its efforts to improve operational efficiency through technology will also continue to boost margins.However, BHP’s fiscal 2024 iron ore production guidance is 254-264.5 Mt, indicating 1% year-over-year growth at the midpoint. Copper production is expected to grow 5.7% to 1,720-1,910 kt, while nickel is projected to increase 2.5% to 77-87 kt. Iron ore prices have been on a downtrend recently due to weaker-than-expected demand in China. The contraction in the manufacturing sector has weighed on copper prices.(You can read the full research report on BHP here >>>)Other noteworthy reports we are featuring today include American International Group, Inc. (AIG), HP Inc. (HPQ) and Exelon Corporation (EXC).Director of ResearchSheraz MianNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Today's Must Read
Lilly (LLY) New Products Hold Key to Sales Growth in 2024
T-Mobile (TMUS) Rides on Healthy Demand, Strategic Buyout
Investments to Drive BHP Group (BHP) Amid Price Volatility
Featured Reports
AIG's Cost-Reduction Initiatives Aid, Debt Remains HighThe Zacks analyst expects AIG's cost-control efforts to continue boosting the bottom line. However, the company's massive debt level remains a concern.
GenAI-Enabled PCs to Aid HP (HPQ) Personal Systems RevenuesPer the Zacks analyst, growing interest in generative artificial intelligence-enabled PCs might give a fresh boost to HP's Personal Systems segment revenues in fiscal 2024 and beyond.
Regulated Investment and Revenue Decoupling Aid Exelon (EXC)Per the Zacks analyst, Exelon's planned $34.5B investment to strengthen transmission and distribution lines and revenue decoupling mitigates the impact of load fluctuation to boost its performance.
NOV Inc. (NOV) to Benefit from Large Installed Base of RigsThe Zacks analyst believes that NOV's large installed base of rigs worldwide will provide it with a steady recurring revenue stream but is worried over the low dividend yield.
Buyouts, Loans Aid Prosperity Bancshares (PB) Amid Cost WoesPer the Zacks analyst, Prosperity Bancshares will continue to benefit from acquisitions. solid loan pipeline, deposits and rise in fee income. Yet, weak mortgage income and high costs are headwinds.
Solid Comps Run to Fuel Urban Outfitters' (URBN) Top LinePer the Zacks analyst, Urban Outfitters commitment to improve comps, invest in direct-to-consumer business and expand e-commerce sales bode well. Comps rose 4.6% during first- quarter fiscal 2025.
Omnicell (OMCL) Banks on Advanced Services, Macro Woes WorryThe Zacks Analyst is impressed with the growing recognition of Omnicell's Advanced Services among the health systems, which are helping to transform pharmacy care. Yet, macro issues pose risks.
New Upgrades
DuPont (DD) Benefits from Productivity Actions, New ProductsPer the Zacks analyst, DuPont's cost and productivity improvement actions will support its margins. It should also gain from new product launches in high-growth markets.
Solid Buyouts & Telecomm Business Prospect Aid Dycom (DY)Per the Zacks analyst, Dycom is banking on strong contributions from acquisitions and significant opportunities from major industry participants, as they are deploying 1-gigabit wireline networks.
Immunovant (IMVT) Pipeline Progress Exhibits Upbeat ProspectsPer the Zacks Analyst, IMVT's lead candidate, IMVT-1402, has significant potential to become a best-in-class medication for a broad set of autoimmune indications, giving it an edge over competitors.
New Downgrades
Technology & Product Investment Costs Hurt Insperity (NSP)Per the Zacks analyst, Insperity's investments toward technology, product and service offerings is likely to keep the bottom line under pressure.
Rising Costs & Higher Competition Hurts Arrow Electronics (ARW)Per the Zacks analyst, rising costs, a highly leveraged balance sheet and intense competition are major concerns for Arrow Electronics.
Multifamily Normalization Hurts Builders FirstSource (BLDR)Per the Zacks analyst, continued multifamily normalization is hurting Builders FirstSource. Also, high costs and a cyclical market is added concern.
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Exelon Corporation (EXC) : Free Stock Analysis Report
HP Inc. (HPQ) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report
American International Group, Inc. (AIG) : Free Stock Analysis Report
T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
BHP Group BHP has made a statement that it has officially dropped its bid to acquire Anglo American NGLOY. This ends BHP’s six-week pursuit for the takeover of Anglo American, which would have created a global mining giant focused on copper and other minerals that are expected to drive the transition to renewable energy.BHP’s statement comes after Anglo American’s announcement on May 22 that its board had unanimously rejected BHP’s third unsolicited, non-binding and highly conditional takeover proposal. This offer referred to BHP’s increased and final bid of $49 billion made on May 20.BHP’s earlier proposals for a potential combination with Anglo American were submitted to the company’s board on May 7 (valued at $42.67 billion) and Apr 16 (deal value of $39 billion).BHP’s all-share offer for Anglo American required that the company would have to complete two separate demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to its shareholders, before the takeover. The all-share offer and required demergers would be inter-conditional.Anglo American stated that the offer did not meet the board’s expectations of value delivered to its shareholders. Also, the requirement to pursue two demergers of publicly listed companies is unprecedented. Further, this combination would require additional material approvals. The approvals required would likely result in material conditions being imposed that would disproportionately impact the value of Anglo American Platinum and Kumba and, subsequently, the value delivered to Anglo American’s shareholders.NGLOY had, however, provided an extension of seven days till May 29, to BHP to come up with a binding offer and propose solutions to address the risks and concerns over the value impact on its shareholders. BHP has decided not to pursue the bid anymore.BHP is now subject to restrictions per Rule 2.8 of the Takeover Code, and will not be able to make any further offer within the next six months. It can make an offer if a new party bids for Anglo American.BHP’s plans for the takeover of Anglo American reflected its ongoing strategy to strengthen its portfolio, which will enable it to focus on commodities like copper, nickel and potash to ride on growing global trends such as decarbonization, electrification population growth, rising living standards in the developing countries among others. In sync with this, BHP Group has joined forces with mining companies focused on early-stage copper and nickel projects, and made additional investments in fiscal 2023 in Brixton Metals, Midland Exploration, Filo Mining and Kabanga Nickel. Following the completion of the acquisition of OZL in May 2023, BHP established the Copper South Australia province. The addition of the Prominent Hill and Carrapateena operations, combined with the Olympic Dam and the potential Oak Dam development, is expected to unlock a pathway to increase volumes and value from the province.
Price Performance
BHP’s shares have gained 4.1% in a year compared with the industry’s 17.2% growth.
Zacks Investment Research
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Zacks Rank & Stocks to Consider
BHP currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS and Ecolab Inc. ECL. CRS currently sports a Zacks Rank #1 (Strong Buy) and ECL carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.18 per share. The consensus estimate for 2024 earnings has moved 6% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.1%. CRS shares have gained 134.9% in a year.The consensus estimate for Ecolab’s 2024 earnings is pegged at $6.59 per share, indicating an increase of 26.5% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.3%. ECL shares have gained 34.5% in a year.
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Ecolab Inc. (ECL) : Free Stock Analysis Report
BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
Anglo American (NGLOY) : Free Stock Analysis Report
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Freeport-McMoRan (FCX) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.
Over the past month, shares of this mining company have returned +5.7%, compared to the Zacks S&P 500 composite's +3.2% change. During this period, the Zacks Mining – Non Ferrous industry, which Freeport-McMoRan falls in, has gained 0.5%. The key question now is: What could be the stock's future direction?
While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings Estimates
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Freeport-McMoRan is expected to post earnings of $0.45 per share, indicating a change of +28.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The consensus earnings estimate of $1.66 for the current fiscal year indicates a year-over-year change of +7.8%. This estimate has changed -0.2% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $2.29 indicates a change of +37.7% from what Freeport-McMoRan is expected to report a year ago. Over the past month, the estimate has changed -0.5%.
With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Freeport-McMoRan.
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
12-month consensus EPS estimate for FCX _12MonthEPSChartUrl
Projected Revenue Growth
While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
For Freeport-McMoRan, the consensus sales estimate for the current quarter of $6.01 billion indicates a year-over-year change of +4.8%. For the current and next fiscal years, $24.99 billion and $25.29 billion estimates indicate +9.4% and +1.2% changes, respectively.
Last Reported Results and Surprise History
Freeport-McMoRan reported revenues of $6.32 billion in the last reported quarter, representing a year-over-year change of +17.3%. EPS of $0.32 for the same period compares with $0.52 a year ago.
Compared to the Zacks Consensus Estimate of $5.66 billion, the reported revenues represent a surprise of +11.74%. The EPS surprise was +18.52%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Freeport-McMoRan is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Conclusion
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Freeport-McMoRan. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
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Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
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Special Participant |
Government of Québec |
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Platinum Sponsors |
Laurentian Bank Securities, National Bank Financial Markets |
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Green Sponsor |
Battery & Critical Metals Sponsor: Kinterra Capital Corp |
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Gold Sponsors |
First Phosphate, IBK Capital, O3 Mining Student Sponsors: Osisko Mining, Glencore Canada |
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Silver Sponsors |
CSE, IR.INC Capital Markets Advisory, Mi3 Financial, PearTree Financial, Stifel, TMX Group Sustainable Sponsor: Osisko Gold Royalties |
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Copper Sponsors |
Alliance Advisors, Amex Exploration, Brooks & Nelson, Cassels, CDPQ, Centre des congrès de Québec, Crux Investor, Digbee, Domco Group of Canada, Generation IACP, Global Business Reports, INFOR Financial, Out of the Box Capital, VRIFY |
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Media & Partners |
BTV, Canadian Mining Magazine, CEO.CA; EBL Consultants, Ellis Martin Report, IR Mining Resource News, Kitco, MarketOne, Mining Discovery, Newsfile, The Northern Miner, The Prospector News, VID Media Incorporated |
Toronto, Ontario–(Newsfile Corp. – May 30, 2024) – THE Mining Investment Event of the North ("THE Event") is pleased to announce sold out status for Tier I speaking slots, while industry companies and investors continue to sign up daily at Canada's Only Tier 1 Global Mining Investment Conference, to be held in Quebec City, June 4-06, 2024.
"We are delighted to announce that we are officially sold out of our speaking slots for 2024. This year, THE Event has grown in stature with the inclusion of a number of large cap issuers, government officials and a record number of new sponsors and investors who will be participating in this unique Canadian global mining investment conference," stated Joanne Jobin, Founder & CEO of THE Event. "THE Event is now being recognized for its conference standards in the mining industry, providing a platform for issuers, investors, and industry leaders to network, share insights, and explore over 300+ investment opportunities. With our rapid growth profile, notable sponsors, and commitment to value-add initiatives, as well as our mission to meet the mining industry's needs with innovative student sponsorship programs and diversity, THE Event is now to set be a pivotal occasion in the global mining investment calendar."
This year, THE Event will host over 150 industry companies including 108 mining companies at the Centre des congrès de Québec. Please see the 2024 Agenda and Brochure with all presenters, panelists and speakers on our website www.themininginvestmentevent.com
THE Participating Mining Companies* 1×1's Only ^^Mi3 ExplorCo Lounge #Coreshack Participant ~Industry Invitee/Corp. Dev.
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THE Event is invitation only – Interested investors & issuers please go here:https://www.themininginvestmentevent.com/register or contact Jennifer Choi, jchoi@irinc.ca
The latest Agenda, Brochure, participating companies, speakers & panelists may be found here: https://themininginvestmentevent.com.
About THE Mining Investment Event of the North – Canada's Only Tier I Global Mining Investment Conference© is held annually in Québec City, Canada. THE Event is independently sponsored and designed to facilitate privately arranged meetings between mining companies, international investors, and various mining government authorities and provides a platform to hear from some of most influential thought leaders in the sector. THE Event is committed to promoting diversity, equality issues and sustainability in the mining industry via education and innovation through its unique Student Sponsorship and SHE-Co Initiatives.
Joanne JobinCEO & FounderIR.INC & VID Media Incorporatedjjobin@irinc.ca
Jennifer ChoiVice President, OperationsIR.INC & VID Mediajchoi@irinc.ca
Brhett BookerAssociateIR.INC & VID Mediabbooker@irinc.caFacebookInstagramTwitterLinkedInYouTube
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/211106
Anglo American is facing a backlash from local Tories over “catastrophic” cuts proposed at a Yorkshire fertiliser mine owned by the FTSE 100 company.
Anglo is planning to scale back investment at the Woodsmith Mine in North Yorkshire after seeking to fend off a £39bn takeover bid from rival BHP.
Tory candidate Roberto Weeden-Sanz, who is campaigning for Scarborough and Whitby constituency where the mine is based, said the project should not become a “sacrificial lamb” for Anglo’s efforts to prevent a BHP takeover.
Mr Weeden-Sanz said he believed Anglo was planning to reduce the workforce by 1,500 and keep a skeleton staff of 100 at the site, which he warned would be “catastrophic”.
He added: “We want them to rethink their current plans, which are essentially to mothball the project.
“There is a huge number of people across the area who are suddenly losing highly skilled, high-value jobs. We’re used to U-turns in politics and it would be no bad thing for there to be a U-turn in Anglo’s decision.”
Anglo chief Duncan Wanblad unveiled plans earlier this month that would leave Woodsmith at a near standstill – Ian Waldie/Bloomberg
Anglo American chief executive Duncan Wanblad unveiled plans earlier this month to dial down investment at Woodsmith and leave it a near standstill. BHP is no longer chasing a bid for Anglo but the group has committed to the Woodsmith overhaul after complaints about its cost from shareholders.
Anglo had been planning to spend about $1bn (£780m) per year on the site, but an update last month cut that back to $200m next year and $100 in 2026.
The company plans to undertake a study to test the site’s feasibility before potentially recruiting other miners to come on to the project as co-investors.
The FTSE 100 group is a major contributor to the local economy, contributing £305m last year.
Since construction at the mine started in 2017, the Woodsmith Project, which is the largest private sector infrastructure project in the country, has generated £1.5bn to the Yorkshire economy.
Ben Houchen, the Tees Valley mayor, said: “Anglo American should not be rushing into decisions that put the livelihoods of hard-working and highly skilled Teessiders at risk.
“We want to hear from Anglo American directly and see them engage with government to make sure every option is considered before drastic measures are taken”.
Jacob Young, the Tory candidate for Redcar, also warned that the project could never restart if contractors were laid off.
The former MP for the Scarborough and Whitby constituency Sir Robert Goodwill previously warned over the impact of shutting Woodsmith. He told The Telegraph last month he was seeking assurances from BHP over the future of Anglo American’s Yorkshire fertiliser mine.
Sir Robert is standing down at the next election.
Anglo declined to comment on the number of job cuts, but said: “These changes will have a direct effect on our business workforce and our team of contractors.”
More details of the cuts will be announced in mid-June, Anglo said.
By Melanie Burton and Scott Murdoch
SYDNEY (Reuters) -BHP Group investors welcomed the top global miner's decision to walk away from a $49 billion plan to take over Anglo American, which rejected three proposed offers from its bigger rival over the past six weeks.
BHP's decision to withhold a binding bid came after Anglo said it would not grant the Australia-headquartered mining group a further extension to iron out details of a deal that called for Anglo to first spin off its South African assets.
The developments ended a tense standoff between the two global mining giants and negotiations in which shareholders warned BHP not to pay too much to secure control over Anglo.
"It was one of the best opportunities out there for them and it was always going to be hard to complete. I applaud them for showing discipline," said Andy Forster, senior investment officer at Argo Investments, which holds BHP shares.
BHP's timing was good but the complexity of the deal requiring demergers and a copper price rally made it difficult to execute, Forster said.
While BHP's Australian-listed shares fell 1.75% on Thursday, they were in line with its peers.
Winning the Anglo deal would have been a career defining victory for BHP CEO Mike Henry, who has reshaped the company since moving into the top job in January 2020, including buying copper producer Oz Minerals for $6.4 billion last year.
"I don’t think it reflects badly on Mike Henry and BHP. It was an opportunistic bid and one that made a lot of sense," said Matthew Haupt, lead portfolio manager at Wilson Asset Management, a BHP investor.
WHAT NEXT FOR BHP
BHP aimed to win control of Anglo's prized copper assets in Latin America and increase access to a metal central to the global shift towards clean energy and electric vehicles, as well as its metallurgical coal assets in Australia.
"As investors, it wasn’t obvious that the proposed deal was very accretive. Yes it would bring more copper to the portfolio, but depending on what they paid for it, it's not necessarily accretive to the share price," Pendal Group portfolio manager Brenton Saunders said.
BHP's tilt at Anglo reflected a growing preference among miners for buying over building assets to grow, given rising costs for developing new mines and a blowout in timelines for regulatory approvals, mining industry sources in Perth said. Building a new mine now averages more than 16 years, according to figures from S&P Global.
"Clearly they remain acquisitive and will be sifting through their other targets for building out the copper portfolio," said John Milroy, a private client adviser at Ord Minnett.
BHP could target London-listed Antofagasta or Canada's Lundin Mining, which both have copper assets in northern Chile where BHP has its Pampa Norte operations, said RBC analyst Kaan Peker.
"Anto is the one that screams the most synergies…but they are very expensive. Most of these you’re going to pay a large premium, so you have to have a lot of synergies to justify it," he added.
BHP declined to comment.
Instead of chasing Anglo, Pendal's Saunders said BHP will have to revert attention to its own growth opportunities in Pilbara iron ore and copper in South Australia and Chile, and hopefully lift dividends.
If it wants to go for Anglo, BHP now has to wait six months before it can approach the company again under British corporate laws. It can return sooner if a new party bids for its takeover target.
After BHP scrapped its proposal, Anglo said it was fully focused on delivering plans it has set out to increase value to shareholders, including divesting its less profitable assets to focus on expanding copper output.
Anglo's shares closed 3% lower at 24.80 pounds in London trading on Wednesday.
"BHP will bide its time for six months and see how investors agitate on the Anglo side," Peker said.
(Reporting by Melanie Burton in Melbourne, Scott Murdoch and Praveen Menon in Sydney; Editing by Christopher Cushing and Sonali Paul)
(Bloomberg) — BHP Group decided against making a firm offer for Anglo American Plc, instead walking away for now from what would have been the biggest mining deal in over a decade.
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The announcement — less than one hour before a 5 p.m. UK deadline — marked an abrupt end to the five-week public battle between two of mining’s biggest names. It will ratchet up the pressure on Anglo Chief Executive Officer Duncan Wanblad to deliver on an ambitious turnaround plan, while his counterpart at BHP may have to look elsewhere for the copper growth that Anglo would have provided.
BHP’s shares fell 1% in Sydney as of 10:09 a.m. local time.
Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but last week agreed to extend the cutoff to allow for talks. The two sides were unable to agree on BHP’s complicated $49 billion deal structure and Anglo said earlier Wednesday it saw no reason for another delay despite a last-minute appeal from BHP.
Read More: Anglo Won’t Extend BHP Deadline, Threatening $49 Billion Bid
A successful takeover would have created a commodities powerhouse that towered over its closest rivals, significantly increasing BHP’s copper production at a time when miners and their investors are positioning for a prolonged period of tight metal supply and rising prices.
BHP’s decision to walk away instead of sweetening or changing its bid also reflects a new reality for the mining industry: the biggest producers have finally returned to dealmaking after years on the sidelines, but boards and managements are wary of angering investors after spending the past decade rebuilding their companies’ reputations following a series of disastrous and expensive takeovers.
The pressure is now on CEO Wanblad to show that Anglo can generate more value for shareholders as a standalone company, after unveiling a radical plan to overhaul the business earlier this month. Analysts and investors have also suggested that BHP or another rival could still target Anglo in the future, particularly if the company succeeds in exiting some of its less attractive businesses. UK takeover rules require BHP to stay away for six months unless Anglo receives a rival bid.
Anglo’s shares fell 3.1% on Wednesday but remain well above the levels seen before Bloomberg first reported the takeover interest. Prices for key commodities including copper and iron ore have rallied over the same period.
BHP first approached Anglo with a proposal in mid-April for the smaller company to spin off its majority stakes in two listed South African miners before an all-share acquisition of the rest of the group. Anglo rejected the offer and instead rushed out a plan to overhaul its business by exiting diamonds, platinum and coal, while slowing spending on a massive UK fertilizer project.
Read More: BHP and Anglo Remain Split on South Africa as Time Runs Out
Anglo has long been viewed as a potential target because of its lucrative copper mines, but its complicated structure and unusual mix of niche commodities have largely kept suitors away. A series of setbacks sent its share price plunging late last year, leaving the company vulnerable to BHP and its CEO Mike Henry, who has been seeking a big deal to grow in copper.
But while BHP has twice increased the number of shares it was willing to pay for Anglo, Henry has held firm in insisting on the spinoffs and refrained from adding a cash element to the deal.
Bloomberg reported last week the sides were closer on value after BHP’s second increase, but the structure remained a key sticking point and the companies and their advisors have been unable to find a solution.
Anglo’s objections to BHP’s proposal have centered on South Africa, which has loomed front and center of a potential deal since it became public. It is home to some of Anglo’s biggest operations, employing tens of thousands of people, and the company has deep political and social ties to the country.
Read More: BHP’s $39 Billion Bid for Anglo American Was Years in the Making
Anglo was concerned that BHP’s demand that it first exit Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. could leave the newly independent Johannesburg-listed companies to carry the cost of any concessions imposed by South Africa, reducing their value and ultimately penalizing the current Anglo investors who would receive the shares in the spinoffs. The multistep deal would require several layers of approval in South Africa, where deals are subjected to “public interest” assessment and authorities have a record of extracting substantial concessions from companies.
The two sides appeared to talk past each other on Wednesday, as BHP emphasized the commitments it has made to ensure regulatory approval in South Africa, while Anglo repeated its concerns that the approvals may result in a loss of value for its shareholders depending on the conditions imposed by authorities.
BHP argued that Anglo should extend the deadline for a second time and offered to discuss a break-up fee if the deal didn’t receive regulatory approvals, but the smaller company’s board said it didn’t see any reason to do so given the continued gulf between their two positions.
–With assistance from Mark Burton, Georgina McKay, Martin Ritchie and Andrew Janes.
(Updates with BHP share move in third paragraph.)
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Investing.com – European stock markets largely fell Thursday, with rising global bond yields hitting sentiment ahead of the release of highly anticipated inflation data at the end of the week.
At 03:10 ET (07:10 GMT), the DAX index in Germany traded 0.3% lower, and the FTSE 100 in the U.K. dropped 0.2% while the CAC 40 in France rose 0.1%.
Rising yields hit sentiment
Equities have retreated in Europe, following the weakness on Wall Street and the losses in Asia overnight, with sentiment pressured by rising U.S. Treasury yields as worries about inflation play into the narrative that interest rates will remain elevated for longer than expected.
The two-year U.S. Treasury yield traded near the 5% level on Thursday while the 10-year yield stayed near its strongest level in weeks.
Data released on Wednesday showed consumer prices in Germany rose more than forecast in May, ensuring that the spotlight is shining even more brightly on the eurozone's reading on Friday.
The eurozone inflation release is expected to tick up 2.5% in May year-on-year, from 2.4% in April.
The European Central Bank is widely expected to cut interest rates next week, but uncertainty over what follows is making investors nervous.
Over in the U.S., the focus is squarely on upcoming gross domestic product data later in the session, and more importantly the PCE price index data, the Federal Reserve’s preferred inflation gauge, on Friday.
Several Fed officials have warned that there needs to be more substantial progress on inflation before the U.S. central bank should be considering cuts.
BHP walks away from Anglo deal
In corporate news, BHP Group (NYSE:BHP) tock fell 1.7% after the mining giant decided against making a formal offer for Anglo American (LON:AAL), walking away from its $49 billion takeover deal.
"We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost," BHP said in a statement, adding that it did not get "key information" from Anglo to address these risks.
Crude slips despite US inventory draw
Crude prices slipped lower Thursday, as wider concerns over high borrowing costs outweighed optimism over a bigger-than-expected draw in U.S. inventories.
By 03:10 ET, the U.S. crude futures (WTI) traded 0.3% lower at $79.03 per barrel, while the Brent contract dropped 0.3% to $83.1 per barrel.
Data from the American Petroleum Institute showed on Wednesday that U.S. oil inventories shrank nearly 6.5 million barrels last week, much more than expectations for a draw of 1.9 million barrels.
The data usually heralds a similar reading from official inventory data, which is due later Thursday. The outsized draw suggested that U.S. fuel demand was picking up with the onset of the travel-heavy summer season, widely seen as the Memorial Day weekend.
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Investing.com — Anglo American 's (LON:AAL) proposed restructuring drive will "take time" as the miner looks to turn the page after a takeover bid by rival BHP Group (LON:BHPB) failed earlier this week, analysts at UBS said in a note downgrading their rating of the stock to "Neutral" from "Buy."
On Wednesday, mining giant BHP ditched its proposed multi-billion plan to acquire Anglo, bringing an end to six weeks of negotiations.
BHP's objective was to fold in Anglo's lucrative copper assets in Latin America, but the deal collapsed with both sides at odds over its complex structure. Under the terms of the proposed acquisition, Anglo would have had to offload its South African platinum and iron ore divisions — a prospect that Anglo ultimately rejected.
Following the collapse of the talks, Anglo told shareholders that it was now focused on delivering a planned overhaul of the company. Anglo has said it is looking to potentially divest several less profitable parts of its operations, including its De Beers diamond unit and its steelmaking coal division, and instead hone in on expanding its copper output.
The move comes as copper prices have shot up this year thanks to the red metal's use in items seen as necessary for both the green energy transition and the data centers powering the development of artificial intelligence.
However, the analysts flagged that Anglo's overhaul will not turn it into a "pure-play" copper miner, adding that they expect 30% of its of 2025 core income will derive from its iron ore segment.
They also noted that Anglo could be the target of another acquisition attempt in "6 plus months" if it does not successfully carry out the restructuring push.
Shares in U.K.-listed Anglo were marginally higher on Thursday. They have risen by more than 26% so far this year.
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By Anousha Sakoui, Amy-Jo Crowley and Lucy Raitano
LONDON (Reuters) – BHP Group's $49 billion bid for Anglo American may have failed but the move highlights how companies have been leading a charge to snap up UK assets as they seek growth in a relatively undervalued market, bankers and analysts said.
"Bidder appetite has definitely accelerated especially among the global corporates," said James Robinson, Head of UK & Ireland M&A, at JPMorgan. "They've been running the slide rule over UK plc for a long time but we are really seeing a pivot to action. Do we continue to see more? The answer is yes."
Besides BHP's bid for Anglo, International Paper 7.4 billion pound bid for DS Smith, Quanex's 788 million pound deal to acquire engineering firm Tyman and Barratt Developments 2.6 billion pound bid for Redrow highlights are among the companies that have seized on UK prospects.
BHP's deal faltered because it couldn't get Anglo to agree on the structure of its offer, a complex deal that involved Anglo agreeing to spinning off two South African units. But driving the offer upswing is the lower valuation of UK companies, giving bidders access to growth in global markets but at a fraction of the price, bankers said.
As at the end of April there were 38 companies under offer in the UK, the highest number since June 2022, according to Peel Hunt. And more of those companies are in the FTSE-100, the analysts found. Take one deal out and the high water mark still stands.
Had BHP Group gone ahead it would have been the largest UK takeover since Takeda made a 45.3 billion pound bid for Shire in 2019. The UK market has been in the doldrums in recent years like M&A globally, which had slowed after a record year in 2021, as companies sat on the sidelines amid a surge in interest rates. The first quarter of 2024 has already seen a rebound in global dealmaking.
Now borrowing costs have peaked and the economic outlook is improving, executives are making bolder strategic moves.
"We're seeing a lot more strategic-led deals, with shares being used as consideration," said Kirshlen Moodley, head of UK M&A at BNP Paribas.
While London's FTSE 100 index has reached record highs, based on forward earnings it is still trading near its deepest discount compared to U.S. markets. The FTSE's 12-month forward price-to-earnings ratio trades at a discount of around 45%, the widest since at least 1990. The FTSE also lags the pan-European STOXX 600 and Germany's DAX.
"The velocity of public M&A deals is pretty unlike any period I can think of in the recent past," said Geoff Iles, head of UK M&A at Bank of America. "There's a sense of opportunity given valuations and exchange rates and given there is less competition from private equity at the moment."
But that dislocation in values has led in many cases for bids to be fought out in public and to the pushing up bid premia, bankers said.
The premium in UK bids completed in 2023 was 44%, well above the long term median of 34.2%, according to BNP Paribas.
While activity from private equity funds has seen an uptick with bids such as Thoma Bravo's $5.32 billion cash bid for cybersecurity firm Darktrace, companies can take advantage of the lack of competition as private equity activity remains below historically low levels, bankers said.
UK-targeted financial sponsor related deals has reached 19.8 billion pounds, up from 12.2 billion pounds in the same period last year but down from 42.8 billion pounds in 2022, according to Dealogic data.
Private equity dealmaking has remained a lower share of dealmaking as higher rates have made leveraged financing more expensive.
The M&A market still faces uncertainty of higher interest rates and economic uncertainty and now an election. "As the UK general election approaches, some may opt to wait for greater political clarity before launching their M&A processes," said Gareth Camp, Partner at Clifford Chance.
(Reporting by Anousha Sakoui, Amy-Jo Crowley and Lucy Raitano; editing by David Evans)
(Bloomberg) — At 7:30 a.m. on Wednesday morning, Anglo American Plc Chairman Stuart Chambers wrapped up a board meeting from the company’s London headquarters, on the street where its iconic De Beers business had called home for almost a century.
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The directors had spent the past hour discussing an overnight request from BHP Group to extend the deadline for its $49 billion takeover bid, set to expire later in the day. Halfway through their meeting, phones lit up with what would prove to be BHP’s final move in the six-week tug-of-war: a statement making its case for a deal, and a public plea for more time.
But Anglo’s directors reached a unanimous decision. There would be no more chances.
The board’s verdict all but assured Anglo’s continued survival — at least for now. But it’s also fired the starting pistol on a new chapter for the 107-year-old company and its South African boss, Duncan Wanblad, who must now make good on a dramatic turnaround plan while under the scrutiny of predatory rivals, as well as shareholders who have just watched a 39% takeover premium walk out the door.
“I don’t want anything to get in the way of getting this done,” Wanblad said Thursday. “We want to demonstrate early progress, and continuous progress. It will get done.”
The CEO has been in the job for just over two years. He inherited a company that was riding high, buoyed by strong commodity markets, but things quickly soured as weaker prices laid bare a series of problems across the company’s sprawling portfolio that had been bubbling below the surface.
Read: Anglo’s Stumbles Make It Prey for Mining’s Biggest Predator
Now he’s promised to save Anglo by breaking it apart, with an ambitious plan to exit platinum and coal, and either sell or spin off De Beers. Wanblad still needs to find a solution to a huge, half-built fertilizer project in the northeast of England that he championed before becoming CEO. And he’ll need to do it all while looking over his shoulder: BHP can come back in six months if it chooses. And the businesses that Anglo has committed to hive off are the same ones that have long deterred other suitors.
“The pressure is on Anglo,” said Liberum analyst Ben Davis. “If they don’t deliver, they are done. Even if they do deliver, they are probably done.”
Discussed Defense
In the weeks after the takeover bid first became public, both companies appeared to be on the back foot. BHP was left fumbling after an initial mishandling of South Africa — including a hastily arranged dash by CEO Mike Henry in the midst of the country’s most tightly contested election since the end of apartheid — while Anglo was caught without an alternative strategy of its own to offer shareholders.
The London-based miner knew its plunging share price could make it a target, and had been discussing for months with its bankers how to defend against an unwanted bid. And yet when BHP Chairman Ken MacKenzie phoned his counterpart Chambers on April 16, it still came as a shock.
The proposal would remain a secret for another week, until a Bloomberg report forced Anglo to confirm the approach. From there, the clock started ticking: under UK takeover rules a bidder has one month to make a binding offer or walk away, unless the target agrees to allow more time.
Read More: BHP Abandons $49 Billion Bid After Anglo Refuses More Talks
This account of how BHP’s ambitious plan to create a new copper-mining giant fell apart is based on conversations with a dozen people close to the two companies, who asked not to be identified discussing private information.
From Anglo’s perspective, the biggest hindrance to a deal was always BHP’s requirement that the company first exit its South African platinum and iron ore units, and the larger miner’s apparent dismissal of the country where Anglo was founded, and where mining remains one of the biggest employers and the state pension fund manager is Anglo’s second-biggest shareholder.
Move Faster
But first the company needed a plan of its own. Investors who had already grown frustrated with Anglo’s poor performance and wanted details about its business review that had been underway for almost a year.
Faced with a growing clamor to move faster and explain to shareholders why they wouldn’t just want to take BHP’s offer, Wanblad and his team spent much of the second week of May thrashing out the final details of a plan.
The CEO was supposed to be in Miami on May 14 along with nearly all his peers — including BHP’s Henry — for one of the industry’s biggest conferences.
Anticipation built ahead of the event as the mining world looked forward to the opposing CEOs sharing a stage. But Wanblad canceled his plans at the last minute, choosing instead to unveil Anglo’s new strategy from the company’s London HQ.
Read More: Anglo Goes for Bold Breakup Plan in Move to Fend Off BHP
The scale of the restructuring both shocked and impressed investors, going further than many had expected.
So far, investors appear to be backing the CEO. Anglo shares have barely reacted to BHP’s walking away and remain well above the levels seen before the bid became public.
But there remain huge questions over whether Wanblad and his team can deliver. And the last-minute nature of the plan has also left some investors queasy. When Wanblad was asked on the day what he planned to do with a small manganese business in South Africa, his answer seemed to be: we haven’t got that far yet.
Video Calls
In the week that Anglo was finalizing its plan, the company received a second, higher offer from BHP. Again, the larger miner asked that Anglo first spin off its stakes in Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. Again, Anglo’s board said no.
It was only after a third proposal that the board indicated it was willing to talk. BHP made its new offer on May 20, and Anglo two days later agreed to extend the deadline for a binding offer by one week.
Optimism in the BHP camp surged that a deal could be close, especially after Anglo’s bankers contacted BHP’s advisers on May 23 to sign non-disclosure agreements.
But the promised talks amounted to very little: Video calls last Friday between advisers for the two sides were stilted and accomplished little. Anglo sent BHP a long letter outlining its concerns over the potential loss of value for its shareholders as a result of the spinoffs, and the BHP team spent the weekend working before sending over a final proposal with some additional commitments on South Africa. But Anglo had heard enough. By around lunch time on Wednesday it was clear the deal was dead.
Anglo felt confident in drawing the line based on conversations with its investors, people familiar with the matter said. One of BHP’s key tactics was an attempt to apply pressure on Anglo via the other company’s shareholders, but the strategy didn’t play out.
South Africa’s Public Investment Corp. issued a statement saying that BHP’s proposal needed to be reworked, while BlackRock Inc., Anglo’s biggest holder, kept its cards close to its chest.
While the deal never became publicly acrimonious, there was a growing resentment within both camps, and the two sides have largely appeared to talk past each other in public. Most of the negotiations were handled by advisors, entirely virtually. The company’s respective chairmen spoke on several occasions. Wanblad and Henry never met or spoke.
Copper Growth
The primary appeal for BHP’s failed bid was Anglo’s copper mines in Chile and Peru, at a time when all the world’s biggest miners and their investors are positioning for a prolonged period of tight metal supply and rising prices.
Under the company’s own plan, copper will remain the centerpiece, alongside iron ore, which it produces in South Africa and Brazil.
Of the businesses that Wanblad has promised to hive off, coal will probably be the easiest. Anglo’s steelmaking coal mines are highly sought after by rivals, and Glencore Plc is among potential bidders, according to people familiar with the matter.
But the rest of the radical transformation appears fraught with pitfalls.
Anglo’s restructuring is “a seismic reshaping of the company,” said Iain Pyle, a fund manager at abrdn, who holds Anglo shares. “It may need patience to sell the less obviously attractive assets in a way that creates value.”
Of all of Anglo’s businesses, De Beers probably poses the biggest challenge. The one-time monopoly plays an outsized role in the diamond industry even though its market share is only about 30%. In addition to mines, it also has a retail network, a synthetic diamond making business and its own luxury jewelry brand.
Read More: Anglo Ditching De Beers Is Hard Blow for Troubled Diamond Market
There are also few natural buyers. Rivals like Rio Tinto Group once coveted the business, but now the industry’s big players have all turned their back on diamonds — selling De Beers was top of BHP’s to-do list after a takeover. Any deal would also need to account for the government of Botswana, which owns 15% of De Beers.
The diamond market imploded last year and the company is keen to wait for a recovery before looking to sell. Despite its challenges, the internal view is that De Beers should command a price that reflects its status as a trophy asset.
Unable or Unwilling
Wanblad also needs to oversee the distribution of Anglo’s shares in Johannesburg-listed Amplats to the company’s existing investors, to complete its exit from platinum. Anglo believes the demerger would avoid scrutiny by South Africa’s antitrust authorities, which was one of its biggest concerns under BHP’s plan. However, many Anglo shareholders could be unable or unwilling to hold stock in the South African firm, causing an outflow of capital and a likely decline in the share price at the beginning of Amplats’ independent life.
Perhaps the most controversial element in Wanblad’s plan is a decision to keep a giant fertilizer mine that Anglo is building in the UK, although he has slowed spending on the site. The Woodsmith project, which would have cost $9 billion in total, is unpopular with many investors given uncertainties about the market and the amount of capital its sucked from the business. The company wants to bring in a partner, to lower its share of the bills and risk.
Wanblad will have to reassure investors that he is the right leader to carry out such a drastic shake up of Anglo.
The CEO has already tested investors’ patience at times since taking the helm. Shareholders were particularly furious at being blindsided in December by the sudden announcement that Anglo was cutting 20% of its copper production.
Should Wanblad stumble, BHP and others are likely to be back and shareholders will be less forgiving.
“Anglo may well remain a target, especially for its copper assets,” said Pyle. “We may yet see bidders come back once Anglo has done some of the hard work reshaping the group themselves”
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TEL AVIV, Israel, May 30, 2024 (GLOBE NEWSWIRE) — REE Automotive Ltd. (Nasdaq: REE) (“REE” or the “Company”), an automotive technology company and provider of full by-wire electric trucks and platforms, today announced its financial results and operational highlights for the three months ended March 31, 2024.
“We started 2024 with strong momentum and catalytic milestones, from achieving U.S. certification to starting to deliver trucks against our order book as part of our demo program with our dealers across North America. These demos are used by dealers to generate orders from their fleet customers, potentially further growing our order book value, which recently crossed $50 million. As our dealer network is now sufficiently built to properly cover North America, we are pivoting to focus on adding fleet orders to our order book and to serve some of the largest fleet companies in the world, including Penske Truck Leasing (“Penske”) and U-Haul International, Inc. (“U-Haul”). We are excited to partner with Penske and have them offer our electric trucks to their customers and we are proud to be the first electrification partner for U-Haul which we believe both demonstrates our leadership in the industry and the value our technology delivers,” stated Daniel Barel, REE’s co-founder and CEO.
“We believe that our REEcorner® technology uniquely positions us in a lucrative portion of the commercial electric vehicles (“EV”) value chain. The U.S. Federal Motor Vehicle Safety Standards (“FMVSS”), U.S. Environmental Protection Agency (“EPA”) and California Air Resources Board (“CARB”) certifications attained solidified our technological leadership. We see growth in market penetration through our dealers’ network across North America, as well as increasing demand from other automotive manufacturers to adopt our REEcorner® technology. We continue to see interest in our mature full by-wire technology for autonomous solutions as we have shown through our collaboration with Airbus UpNext (“Airbus”) in its autonomous program. We believe that this, coupled with our capital expenditure (“CapEx”)-light manufacturing and operations strategy, enables us to rapidly reach our commercial market and financial goals. We believe our initial customer deliveries, and the feedback we receive on our products, show strong potential, and we expect it will generate significant growth in our order book supporting our production strategy,” Barel concluded.
Q1 2024 and Recent Highlights:
Business:
-
Penske begins to offer Powered by REE® EVs to its customers. Subsequent to quarter end, REE delivered to Penske a P7-C upfitted with a 16-foot Wabash DuraPlate® body for demos and orders across North America. Penske is a leading global transportation services provider managing a fleet of approximately 450,000 vehicles with more than 2,650 rental locations across North America. The Penske truck debuted at the 2024 ACT Expo generating interest from large fleets.
-
U-Haul received and is evaluating a Powered by REE® class 5 electric platform as the first solution to support the electrification of its fleet. U-Haul is a subsidiary of the U-Haul Holding Company (NYSE: UHAL) founded in 1945, U-Haul operates more than 23,000 rental locations across all 50 states and 10 Canadian provinces with a fleet of 192,200 trucks, 138,500 trailers and 44,500 towing devices.
-
Airbus selected the Powered by REE® vehicle for a fully autonomous program based on REE’s full by-wire capabilities. REE believes that this solidifies the maturity of its full by-wire technology and potentially opens REE to the autonomous driving market.
-
Deliveries have commenced to REE’s distribution network of 20 dealers with 66 points of sales and service and access to a potential of over 200 fleets across the U.S and Canada. Demos of REE’s P7-C have begun to be delivered to fleets for orders, potentially adding further momentum to the current $50 million order book value.
-
Launched demo program to expand fleets’ exposure to REE’s commercial EV. Subsequent to quarter-end more than 120 demo rides were performed with multiple prospects, with the aim to generate follow-on orders based on continued positive feedback received from fleets. The demos give fleets the opportunity to experience the first FMVSS certified full by-wire commercial vehicle, secure the inventory they need to transition their fleets to electric and aim to showcase the P7-C’s driver-centric cabin, modular design and tight maneuverability firsthand.
-
Two new complete P7-C solutions were showcased at the National Truck and Equipment Association’s Work Truck Week in Indianapolis, Indiana. Addressing Pritchard’s demand, a full P7-C truck was upfitted with a KUV body from Knapheide, North America’s most popular manufacturer of work truck bodies and truck beds. Subsequent to quarter-end, at the ACT Expo, REE presented the P7-C truck upfitted with a 16-foot Wabash DuraPlate® body, built per Penske’s requirements.
Technology:
-
P7-C is the first full by-wire truck to achieve U.S. FMVSS and EPA certifications. P7-C vehicles are now eligible for a U.S. federal tax credit of up to $40,000 per vehicle and are expected to be eligible for over $100,000 of incentives per vehicle with additional state incentives.
Operations:
-
REE is progressing with its CapEx light manufacturing strategy to achieve bill of materials break-even in the low hundreds of vehicles. The two-step manufacturing approach involves U.S. assembly of full vehicles and continued production of REEcorners® at the Company’s automated Coventry, UK facility, which has an annual capacity of 10,000 vehicle sets.
-
The tooling investment for the REEcorner® in the UK has been deployed, resulting in a highly efficient, automated production line consisting of 13 robotic stations, run by only seven human operators. REEcorners® are built upon customer order, not inventory, thus optimizing working capital.
-
Financing options are being evaluated to fund scale production of full vehicles by the end of 2024 and subsequent scaling in 2025 and beyond. Once funding is secured, REE plans to ramp up production in the U.S. against its order book, in parallel to the completion of the production tooling program. Once the U.S. production tooling comes online, REE plans to scale production responsibly according to available working capital and demand, with a goal of de-risking execution.
Financials:
-
First quarter GAAP net loss narrowed by 29% QoQ to $25.2 million compared to $35.2 million in Q4 2023 and narrowed by 12% year-over-year (YoY) compared to $28.6 million in Q1 2023. The YoY decrease was mainly driven by operational efficiencies implemented, which reduced payroll and related costs and other operational expenses, as well as lower share-based compensation expenses. These decreases were partially offset by losses from remeasurement of warrants and financial expenses related to convertible notes as well as an increase in income tax expenses. The decrease compared to the previous quarter was mainly attributed to the increased non-recurring engineering development costs in Q4 2023.
-
Non-GAAP net loss in the quarter narrowed by 33% QoQ to $21.7 million compared to $32.2 million in Q4 2023 and narrowed by 10% from $24.0 million in Q1 2023.
-
REE ended Q1 2024 with liquidity of $77.5 million comprised of cash and cash equivalents and short-term investments, inclusive of a $15 million credit facility.
-
Free cash flow (FCF) burn continued to narrow in Q1 2024, with a 6% reduction from Q4 2023, consistent with the trend in full year 2023 when REE reported a 25% YoY decrease in FCF burn.
-
During the first quarter, the Company raised approximately $15 million (gross) in proceeds through a public offering of ordinary shares priced at $6.50 per share. The equity raise was led by M&G Investment Management Limited, one of Europe’s largest investment firms, a strategic automotive investor, and REE’s largest shareholder. In addition, from January 2024 through May 30, 2024, the Company issued 54,938 Class A Ordinary Shares under the At the Market Offering Agreement with H.C. Wainwright & Co., LLC for total gross proceeds of approximately $0.3 million.
A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Non-GAAP Financial Measures
We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.
We believe that adjusted EBITDA, non-GAAP net loss, non-GAAP operating expenses, non-GAAP basic and diluted net loss per share, reflect additional means of evaluating REE’s ongoing operating results and trends. We believe that these non-GAAP measures provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.
We believe that Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash used in our operational activities and capital expenditures. Free Cash flow burn represents the negative cash outflow used in our activities as explained above.
|
REE AUTOMOTIVE LTD.Condensed Consolidated Statements of Comprehensive LossU.S. dollars in thousands (except share and per share data)(Unaudited) |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
March 31,2024 |
|
December 31,2023 |
|
March 31,2023 |
||||||
|
Revenues |
$ |
160 |
|
|
$ |
455 |
|
|
$ |
— |
|
|
Cost of revenues |
|
804 |
|
|
|
913 |
|
|
|
— |
|
|
Gross loss |
$ |
(644 |
) |
|
$ |
(458 |
) |
|
$ |
— |
|
|
Operating expenses: |
|
|
|
|
|
||||||
|
Research and development expenses, net |
|
15,358 |
|
|
|
28,587 |
|
|
|
18,874 |
|
|
Selling, general and administrative expenses |
|
7,170 |
|
|
|
8,125 |
|
|
|
10,843 |
|
|
Total operating expenses |
|
22,528 |
|
|
|
36,712 |
|
|
|
29,717 |
|
|
Operating loss |
$ |
(23,172 |
) |
|
$ |
(37,170 |
) |
|
$ |
(29,717 |
) |
|
Income (loss) from warrants remeasurement |
|
(706 |
) |
|
|
396 |
|
|
|
— |
|
|
Financial income, net |
|
131 |
|
|
|
341 |
|
|
|
1,061 |
|
|
Net loss before income tax |
|
(23,747 |
) |
|
|
(36,433 |
) |
|
|
(28,656 |
) |
|
Income tax expense (income) |
|
1,436 |
|
|
|
(1,200 |
) |
|
|
(34 |
) |
|
Net loss |
$ |
(25,183 |
) |
|
$ |
(35,233 |
) |
|
$ |
(28,622 |
) |
|
Net comprehensive loss |
$ |
(25,183 |
) |
|
$ |
(35,233 |
) |
|
$ |
(28,622 |
) |
|
Basic and diluted net loss per Class A ordinary share(1) |
$ |
(2.28 |
) |
|
$ |
(3.44 |
) |
|
$ |
(2.87 |
) |
|
Weighted average number of ordinary shares used in computing basic and diluted net loss per share(1) |
|
11,023,880 |
|
|
|
10,236,827 |
|
|
|
9,961,218 |
|
(1) On October 18, 2023, the Company effected a reverse share split of the Company’s Class A ordinary shares and Class B ordinary shares at the ratio of 1-for-30. As a result, all Ordinary Class A shares, Ordinary Class B shares, options for Ordinary Class A Shares, exercise price and net loss per share amounts were adjusted retroactively for all periods presented above as if the stock reverse split had been in effect as of the date of these periods. For further details, see the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024.
|
REE AUTOMOTIVE LTD.Condensed Consolidated Balance SheetsU.S. dollars in thousands (except share and per share data) |
|||||||
|
|
March 31,2024 |
|
December 31,2023 |
||||
|
|
(Unaudited) |
|
(Audited) |
||||
|
ASSETS |
|
|
|
||||
|
CURRENT ASSETS: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
53,612 |
|
|
$ |
41,232 |
|
|
Short-term investments |
|
23,880 |
|
|
|
44,395 |
|
|
Accounts receivable |
|
45 |
|
|
|
455 |
|
|
Inventory |
|
1,500 |
|
|
|
463 |
|
|
Other accounts receivable and prepaid expenses |
|
8,143 |
|
|
|
6,959 |
|
|
Total current assets |
|
87,180 |
|
|
|
93,504 |
|
|
|
|
|
|
||||
|
NON-CURRENT ASSETS: |
|
|
|
||||
|
Non-current restricted cash |
|
3,009 |
|
|
|
3,008 |
|
|
Other accounts receivable |
|
2,348 |
|
|
|
2,871 |
|
|
Operating lease right-of-use assets |
|
20,591 |
|
|
|
21,418 |
|
|
Property and equipment, net |
|
17,113 |
|
|
|
17,099 |
|
|
Total non-current assets |
|
43,061 |
|
|
|
44,396 |
|
|
TOTAL ASSETS |
$ |
130,241 |
|
|
$ |
137,900 |
|
|
|
|
|
|
||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
|
CURRENT LIABILITIES: |
|
|
|
||||
|
Short term loan |
$ |
15,015 |
|
|
$ |
15,019 |
|
|
Trade payables |
|
3,430 |
|
|
|
3,703 |
|
|
Other accounts payable and accrued expenses |
|
12,985 |
|
|
|
14,046 |
|
|
Operating lease liabilities |
|
2,407 |
|
|
|
2,411 |
|
|
Total current liabilities |
|
33,837 |
|
|
|
35,179 |
|
|
|
|
|
|
||||
|
NON-CURRENT LIABILITIES: |
|
|
|
||||
|
Warrants liability |
|
4,106 |
|
|
|
3,400 |
|
|
Convertible promissory notes |
|
5,577 |
|
|
|
4,806 |
|
|
Deferred tax liability |
|
725 |
|
|
|
— |
|
|
Operating lease liabilities |
|
15,659 |
|
|
|
16,440 |
|
|
Total non-current liabilities |
|
26,067 |
|
|
|
24,646 |
|
|
TOTAL LIABILITIES |
|
59,904 |
|
|
|
59,825 |
|
|
|
|
|
|
||||
|
SHAREHOLDERS’ EQUITY: |
|
|
|
||||
|
Ordinary shares |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
931,656 |
|
|
|
914,211 |
|
|
Accumulated deficit |
|
(861,319 |
) |
|
|
(836,136 |
) |
|
Total shareholders’ equity |
|
70,337 |
|
|
|
78,075 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
130,241 |
|
|
$ |
137,900 |
|
|
REE AUTOMOTIVE LTD.Condensed Consolidated Statements of Cash FlowsU.S. dollars in thousands(Unaudited) |
|
||||||
|
|
Three Months Ended |
||||||
|
|
March 31,2024 |
|
March 31,2023 |
||||
|
Cash flows from operating activities: |
|
|
|
||||
|
|
|
|
|
||||
|
Net loss |
$ |
(25,183 |
) |
|
$ |
(28,622 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
|
Depreciation |
|
813 |
|
|
|
483 |
|
|
Accretion income on short-term investments |
|
— |
|
|
|
(328 |
) |
|
Share-based compensation |
|
2,823 |
|
|
|
4,658 |
|
|
Change in fair value of warrants liability |
|
706 |
|
|
|
— |
|
|
Change in fair value of derivative liability |
|
441 |
|
|
|
— |
|
|
Amortization of convertible promissory note |
|
112 |
|
|
|
— |
|
|
Interest expenses |
|
215 |
|
|
|
— |
|
|
Decrease in accrued interest on short-term investments |
|
515 |
|
|
|
171 |
|
|
Increase in inventory |
|
(1,037 |
) |
|
|
— |
|
|
Decrease in accounts receivable |
|
410 |
|
|
|
— |
|
|
Increase in other accounts receivable and prepaid expenses |
|
(661 |
) |
|
|
(806 |
) |
|
Change in operating lease right-of-use assets and liabilities, net |
|
42 |
|
|
|
(293 |
) |
|
Decrease in trade payables |
|
(235 |
) |
|
|
(944 |
) |
|
Decrease in other accounts payable and accrued expenses |
|
(911 |
) |
|
|
(780 |
) |
|
Increase in deferred tax liability, net |
|
725 |
|
|
|
— |
|
|
Other |
|
— |
|
|
|
31 |
|
|
Net cash used in operating activities |
|
(21,225 |
) |
|
|
(26,430 |
) |
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
||||
|
|
|
|
|
||||
|
Purchase of property and equipment |
|
(865 |
) |
|
|
(1,269 |
) |
|
Purchases of short-term investments |
|
— |
|
|
|
(22,364 |
) |
|
Proceeds from short-term investments |
|
20,000 |
|
|
|
55,100 |
|
|
Net cash provided by investing activities |
|
19,135 |
|
|
|
31,467 |
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
||||
|
|
|
|
|
||||
|
Proceeds from issuance of ordinary shares, net |
|
14,471 |
|
|
|
— |
|
|
Proceeds from exercise of options and warrants |
|
— |
|
|
|
68 |
|
|
Repayment of short term loan |
|
(15,000 |
) |
|
|
— |
|
|
Proceeds from short term loan |
|
15,000 |
|
|
|
— |
|
|
Net cash provided by financing activities |
|
14,471 |
|
|
|
68 |
|
|
|
|
|
|
||||
|
Increase in cash, cash equivalents and restricted cash |
|
12,381 |
|
|
|
5,105 |
|
|
Cash, cash equivalents and restricted cash at beginning of year |
|
44,240 |
|
|
|
59,925 |
|
|
Cash, cash equivalents and restricted cash at end of period |
$ |
56,621 |
|
|
$ |
65,030 |
|
|
Reconciliation of GAAP Financial Metrics to Non-GAAPU.S. dollars in thousands (except share and per share data)(Unaudited)Reconciliation of Net Loss to Adjusted EBITDA |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
Mar 31,2024 |
|
Dec 31,2023 |
|
Mar 31,2023 |
||||||
|
Net Loss on a GAAP Basis |
$ |
(25,183 |
) |
|
$ |
(35,233 |
) |
|
$ |
(28,622 |
) |
|
Financial income, net |
|
(131 |
) |
|
|
(341 |
) |
|
|
(1,061 |
) |
|
Income tax expense (income) |
|
1,436 |
|
|
|
(1,200 |
) |
|
|
(34 |
) |
|
Loss (income) from warrants remeasurement |
|
706 |
|
|
|
(396 |
) |
|
|
— |
|
|
Depreciation, amortization and accretion |
|
1,640 |
|
|
|
1,541 |
|
|
|
1,060 |
|
|
Share-based compensation |
|
2,823 |
|
|
|
3,388 |
|
|
|
4,658 |
|
|
Adjusted EBITDA |
$ |
(18,709 |
) |
|
$ |
(32,241 |
) |
|
$ |
(23,999 |
) |
|
Reconciliation of net cash used in operating activities to Free Cash Flow |
||||||||
|
|
Three Months Ended |
|||||||
|
|
Mar 31,2024 |
|
Dec 31,2023 |
|
Mar 31,2023 |
|||
|
Net cash used in operating activities |
(21,225 |
) |
|
(23,084 |
) |
|
(26,430 |
) |
|
Purchase of property and equipment |
(865 |
) |
|
(392 |
) |
|
(1,269 |
) |
|
Free Cash Flow |
(22,090 |
) |
|
(23,476 |
) |
|
(27,699 |
) |
|
Reconciliation of GAAP operating expenses to Non-GAAP operating expenses; GAAP net loss to Non-GAAP net loss, and presentation of Non-GAAP net loss per Share, basic and diluted: |
|||||||||||
|
|
Three Months Ended |
||||||||||
|
|
Mar 31,2024 |
|
Dec 31,2023 |
|
Mar 31,2023 |
||||||
|
GAAP operating expenses |
|
22,528 |
|
|
|
36,712 |
|
|
|
29,717 |
|
|
Share-based compensation |
|
(2,823 |
) |
|
|
(3,388 |
) |
|
|
(4,658 |
) |
|
Non-GAAP operating expenses |
|
19,705 |
|
|
|
33,324 |
|
|
|
25,059 |
|
|
|
|
|
|
|
|
||||||
|
GAAP net loss |
|
(25,183 |
) |
|
|
(35,233 |
) |
|
|
(28,622 |
) |
|
Loss (income) from warrants remeasurement |
|
706 |
|
|
|
(396 |
) |
|
|
— |
|
|
Share-based compensation |
|
2,823 |
|
|
|
3,388 |
|
|
|
4,658 |
|
|
Non-GAAP net loss |
$ |
(21,654 |
) |
|
$ |
(32,241 |
) |
|
$ |
(23,964 |
) |
|
|
|
|
|
|
|
||||||
|
Weighted average number of ordinary shares used in computing basic and diluted net loss per share(1) |
|
11,023,880 |
|
|
|
10,236,827 |
|
|
|
9,961,218 |
|
|
Non-GAAP basic and diluted net loss per share(1) |
$ |
(1.96 |
) |
|
$ |
(3.15 |
) |
|
$ |
(2.41 |
) |
(1) On October 18, 2023, the Company effected a reverse share split of the Company’s Class A ordinary shares and Class B ordinary shares at the ratio of 1-for-30. As a result, all Ordinary Class A shares, Ordinary Class B shares, options for Ordinary Class A Shares, exercise price and net loss per share amounts were adjusted retroactively for all periods presented above as if the stock reverse split had been in effect as of the date of these periods. For further details, see the Company’s Annual Report on Form 20-F filed with SEC on March 27, 2024.
To learn more about REE Automotive’s patented technology and unique value proposition that position the company to break new ground in e-mobility, visit www.ree.auto.
About REE AutomotiveREE Automotive (Nasdaq: REE) is an automotive technology company that allows companies to build electric vehicles of various shapes and sizes on their modular platforms. With complete design freedom, vehicles Powered by REE® are equipped with the revolutionary REEcorner®, which packs critical vehicle components (steering, braking, suspension, powertrain and control) into a single compact module positioned between the chassis and the wheel. As the first company to FMVSS certify a full by-wire vehicle in the U.S., REE’s proprietary by-wire technology for drive, steer and brake control eliminates the need for mechanical connection. Using four identical REEcorners® enables REE to make the industry’s flattest EV platforms with more room for passengers, cargo and batteries. REE platforms are future proofed, autonomous capable, offer a low total cost of ownership (TCO), and drastically reduce the time to market for fleets looking to electrify. To learn more visit www.ree.auto.
Media ContactMalory Van GuilderSkyya PR for REE Automotive+1 651-335-0585ree@skyya.com
Investor ContactDana Rubinstein Chief Strategy Officer | REE Automotiveinvestors@ree.auto
Caution About Forward-Looking StatementsThis communication includes certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements regarding REE or its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. For example, REE is using forward-looking statements when it discusses that its REEcorner® technology uniquely positions it in a lucrative portion of the commercial EV value chain, the growing demand to adopt its REEcorner® technology and products, its outlook that deliveries are expected to grow to the low thousands of vehicles in 2025, working up to a cumulative delivery goal of approximately 6,000 vehicles by the end of 2026, putting it in a position for positive cash flow, access to a potential of 200 fleets across North America, benefits and advantages of REE trucks, that P7-C vehicles are expected to be eligible for over $100,000 of incentives per vehicle with additional state credits, that it is evaluating its financing options to fund the scaling of production of full vehicles by the end of 2024, its planned subsequent scaling in 2025 and beyond, that once funding is secured, and that once U.S. production tooling comes online, that it plans to ramp up production responsibly according to available working capital and demand, with a goal of de-risking execution. In addition, any statements that refer to plans, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “aim” “anticipate,” “appear,” “approximate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would”, “designed,” “target” and similar expressions (or the negative version of such words or expressions) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements, other than statements of historical facts, may be forward-looking statements. Forward-looking statements in this communication may include, among other things, statements about REE’s strategic and business plans, technology, relationships and objectives, including its ability to meet certification requirements, the impact of trends on and interest in our business, or product, intellectual property, REE’s expectation for growth, and its future results, operations and financial performance and condition.
These forward-looking statements are based on REE’s current expectations and assumptions about future events and are based on currently available information as of the date of this communication and current expectations, forecasts, and assumptions. Although REE believes that the expectations reflected in forward-looking statements are reasonable, such statements involve an unknown number of risks, uncertainties, judgments, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. These factors are difficult to predict accurately and may be beyond REE’s control. Forward-looking statements in this communication speak only as of the date made and REE undertakes no obligation to update its forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. In light of these risks and uncertainties, investors should keep in mind that results, events or developments discussed in any forward-looking statement made in this communication may not occur.
Uncertainties and risk factors that could affect REE’s future performance and could cause actual results to differ include, but are not limited to: REE’s ability to commercialize its strategic plan, including its plan to successfully evaluate, obtain regulatory approval, produce and market its P7 lineup; REE’s ability to maintain and advance relationships with current Tier 1 suppliers and strategic partners; development of REE’s advanced prototypes into marketable products; REE’s ability to grow and scale manufacturing capacity through relationships with Tier 1 suppliers; REE’s estimates of unit sales, expenses and profitability and underlying assumptions; REE’s reliance on its UK Engineering Center of Excellence for the design, validation, verification, testing and homologation of its products; REE’s limited operating history; risks associated with building out of REE’s supply chain; risks associated with plans for REE’s initial commercial production; REE’s dependence on potential suppliers, some of which will be single or limited source; development of the market for commercial EVs; risks associated with data security breach, failure of information security systems and privacy concerns; risks related to lack of compliance with Nasdaq’s minimum bid price requirement; future sales of our securities by existing material shareholders or by us could cause the market price for the Class A Ordinary Shares to decline; potential disruption of shipping routes due to accidents, political events, international hostilities and instability, piracy or acts by terrorists; intense competition in the e-mobility space, including with competitors who have significantly more resources; risks related to the fact that REE is incorporated in Israel and governed by Israeli law; REE’s ability to make continued investments in its platform; the impact of the COVID-19 pandemic, interest rate changes, the ongoing conflict between Ukraine and Russia and any other worldwide health epidemics or outbreaks that may arise and adverse global conditions, including macroeconomic and geopolitical uncertainty; the global economic environment, the general market, political and economic conditions in the countries in which we operate; the ongoing military conflict in Israel; fluctuations in interest rates and foreign exchange rates; the need to attract, train and retain highly-skilled technical workforce; changes in laws and regulations that impact REE; REE’s ability to enforce, protect and maintain intellectual property rights; REE’s ability to retain engineers and other highly qualified employees to further its goals; and other risks and uncertainties set forth in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in REE’s annual report filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27, 2024 and in subsequent filings with the SEC.
For Immediate Release
Chicago, IL – May 29, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Southern Copper SCCO, Allstate ALL and Datadog DDOG.
Here are highlights from Tuesday’s Analyst Blog:
A Big Inflation Data Dump: Global Week Ahead
Out across Thursday and Friday, in the Global Week Ahead, consumer spending & inflation data from the U.S., the Eurozone and Japan could reshape traders' views.
This fresh inflation data dump will guide both trader and investors' expectations — over the scale and pace of interest rate changes to come — in these major economies.
Securities markets brace for the T+1 shortening of trade settlements for U.S. securities.
Finally, South Africans head to the polls, in that country's most uncertain election in decades.
Next are Reuters' five world market themes, reordered for equity traders—
(1) On Friday, fresh U.S. Personal Consumption Expenditure (PCE) data lands.
Key U.S. inflation data — the personal consumption expenditures (PCE) price index — due on May 31st, will give the next hints about whether the Federal Reserve is in position to start lowering interest rates later this year.
It follows separate data earlier this month that showed monthly consumer prices increasing less than expected, which kept alive investors' hopes for rate cuts at some point this year, after hotter-than-expected inflation reports in the first quarter.
Minutes of the last meeting showed Fed officials indicated they still had faith price pressures would ease, if only slowly.
But they also said the Fed should wait several more months to ensure inflation is back on track to its 2% target before any moves.
(2) On Friday, Eurozone consumer price inflation also comes out.
The European Central Bank (ECB) has all but promised to cut its deposit rate from a record high of 4% in June.
But it's expected to keep markets guessing about how far and fast it will lower borrowing costs after that, particularly if monthly inflation data out on May 31st shows price pressures remain volatile.
Economists polled by Reuters expect Eurozone inflation to have risen to +2.5% in May year-on-year, from +2.4% in April.
Societe Generale economists predicted the ECB will cut rates in June and September but then pause to wait for the Fed to implement its first rate cut and assess inflationary risks from rising wages.
Market pricing is less clear on when that second rate cut might come.
"With wage growth running high and the Fed forced to hold off rate cuts for now, we expect the language from the ECB to remain hawkish," the SocGen team said.
(3) On Friday, Japan's Ministry of Finance (MoF) releases its FX intervention data.
Consumer prices across Japan are in the spotlight as markets try to gauge when the Bank of Japan (BOJ) could next raise rates, with Tokyo inflation data scheduled for May 31st taking center stage.
The figures come two weeks before the BOJ's next monetary policy meeting, where some are betting the central bank could deliver its second rate rise after March's historic move.
Policymakers have thus far remained reticent on how soon further hikes could come, but they face increasing pressure to do so as a fragile yen continues to cripple weak consumption.
May 31st will also see the periodic release of the Ministry of Finance's intervention data, which covers the recent rounds of suspected intervention and the BOJ's bond buying schedule, where traders will look out for cuts in the amount of central bank purchasing.
(4) Securities move to T+1 trade settlement.
A Wall Street boom confounding the old 'sell in May and go away' investment adage is adding to worries among those tasked with ensuring a smooth transition from two-day to one-day trade settlement in the United States, Canada and Mexico on May 28th for U.S. stocks, corporate and municipal bonds, and other securities.
As trading activity climbs, so too do the risks of so-called trade "fails" — when intermediaries don't have necessary instructions to settle on behalf of clients within the tighter time frame.
This might trigger a rush for dollars among non-U.S. investors who need to borrow at short notice to cover any temporary mismatch in inflows and outgoings.
Any disruption is expected to be temporary, and the move to T+1 is broadly considered a crucial step towards more liquid and efficient financial markets.
But given time zones, the move to T+1 trade settlement is effectively T+0 for many in Asia, where preparations are seen lagging other regions.
(5) On Wednesday, South Africa holds a national election.
South Africans vote in a national election on Wednesday and, for the first time since the end of apartheid 30 years ago, polls suggest the ruling African National Congress party (ANC) is at risk of losing its parliamentary majority.
If the ANC gets less than 50%, or even 45%, support it would have to seek one or more coalition partners to govern.
Get the more business friendly Democratic Alliance (DA) on board and the rand and other South African assets are likely to take it in their stride.
But any hint that it might be the far-left Marxist Economic Freedom Fighters (EFF) or recently-formed MK, led by ex-President Jacob Zuma, then that stride might suddenly become a stumble.
The drama might not end there, either.
President Cyril Ramaphosa could face an internal leadership challenge if the ANC is perceived to have performed poorly.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Southern Copper : This is a $117 a share stock, found in the Mining – Non-Ferrous industry. This is a $91B market cap stock. The Zacks Value score is F. The Zacks Growth score is C. The Zacks Momentum score is B.
Phoenix, AZ-based Southern Copper Corporation engages in mining, exploring, smelting and refining copper and other minerals. The company conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.
Southern Copper has the largest copper reserves in the industry and operates high-quality, world-class assets in investment grade countries, such as Mexico and Peru.
Southern Copper reports results under three reportable segments.
Each consist of a group of mines with similar economic characteristics, type of products, processes and support facilities, regulatory environments as well as employee bargaining contracts.
Peruvian operations (around 36% of the company's revenues) includes the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities that service both mines. The Peruvian operations produce copper, with significant by-product production of molybdenum, silver and other materials.
Mexican Open-Pit (58% of revenues) includes La Caridad and Buenavista mine complexes, the smelting and refining plants and support facilities, which service both mines. The Mexican open pit operations produce copper, with significant by-product production of molybdenum, silver and other materials.
Mexican underground operations (6% of revenues) (IMMSA unit) includes five underground mines that produce zinc, lead, copper, silver and gold, a coal mine which produces coal and coke, and several industrial processing facilities for zinc, copper and silver.
The geographic breakdown of the company's sales is as follows – Americas (50% of revenues), Europe (32%) and Asia (18%).
Approximately 80% of the company's revenue comes from the sale of copper, 6% from molybdenum and 10% from silver and zinc.
(2) Allstate : This is a $164 a share stock, found in the Insurance – Property & Casualty industry. This is a $43B market cap stock. The Zacks Value score is B. The Zacks Growth score is B. The Zacks Momentum score is A.
Founded in 1931 and headquartered in Northbrook, IL, The Allstate Corp. is the third-largest property-casualty (P&C) insurer and the largest publicly-held personal lines carrier in the U.S.
The company also provides a range of life insurance and investment products to its diverse customer base. It provides insurance products to approximately 16 million households through more than 12,000 exclusive agencies and financial specialists in the U.S. and Canada.
As of Mar 31, 2024, total policies in force amounted to 197.3 million. The company generated $57.1 billion in revenues in 2023, in which Property and Casualty insurance premiums, and Accident and Health insurance premiums/contract charges contributed 88.7% and 3.2%, respectively. The rest was generated through other sources and investment income.
Following the closing of the National General acquisition, the company reports through the following segments: Property-Liability, Protection Services and Allstate Health and Benefits.
Property-Liability (90.9% of total revenues in 2023): It was previously Discontinued Lines and Coverages. This segment incorporates Allstate Protection and Run-off Property-Liability.
Protection Services (4.9%): It includes consumer product protection plans. Brands like Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside Services, Arity and Allstate Identity Protection are included in this segment. The company provides identity protection services and data and analytic solutions utilizing automotive telematics information.
Allstate Health and Benefits (4.2%): It was previously Allstate Benefits. Accident and health results of National General are incorporated in this segment. It provides life, accident, short-term disability, critical illness, and multiple other health insurance products. The company expects the sale of Health and Benefits business to be completed by 2024.
The remaining revenues were generated from other sources.
(3) Datadog : This is a $122 a share stock, found in the Internet – Software industry. This is a $41B market-cap stock. The Zacks Value score is F. The Zacks Growth score is A. The Zacks Momentum score is B.
Datadog is a monitoring and analytics platform for developers, IT operations teams, and business users, in the cloud age.
The company's business runs around its portfolio of over 400 out-of-the-box integrations including public cloud, private cloud, on-premise hardware, databases and third-party software.
Delaware, NY-based Datadog became a public company in September 2019.
The company's Software as a Service (SaaS) platform integrates and automates Infrastructure Monitoring, Application Performance Monitoring (APM), Log Management, User Experience Monitoring, Network Performance Monitoring (NPM), Security Monitoring, Incident Management and Continuous Profiler that can be used individually or as a unified solution by customers.
The company has a single operating and reportable segment. Solid uptake of its cloud-based monitoring and analytics platform also helped Datadog strengthen its customer base.
Datadog generates revenues from the sale of subscriptions to customers using its cloud-based platform. The terms of the subscription agreements are primarily monthly or annual, with the majority of revenues coming from annual subscriptions.
Datadog reported revenues of $2.13 billion in 2023. As of Dec 31, 2023 the company has over 27,300 customers in more than 100 countries, up from about 23,200 last year.
As of Dec 31st, 2023, 42% of the Fortune 500 are Datadog customers, up from 37% last year.
As of Dec 31, 2023, the company had 5,200 employees operating across 33 countries with 40% of full-time employees located outside the United States.
The company faces significant competition from the likes of IBM, Microsoft Corporation, Cisco Systems, Dynatrace Software Inc. and Splunk, among others.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Selling the July 55-strike call option generates an income of 4.68% in just under two months, equaling around 32.88% annualized.
Investing.com– Anglo American PLC (LON:AAL) was downgraded by Jefferies after a takeover attempt by mining giant BHP Group Ltd (ASX:BHP) fell through this week, with the brokerage citing potential risks as the copper miner undertakes a major restructuring.
Jefferies downgraded Anglo’s London shares to Hold from Buy, and also cut the stock’s price target to 2,700 pence from 3,200 pence. The new PT represents an upside of about 9% from current levels.
BHP dropped its $49 billion bid for Anglo this week after the London-listed copper miner rejected a last-minute request for more time to hash out a better deal.
The key point of contention in the deal was BHP’s demands that Anglo offload its South African platinum and iron ore businesses, which Anglo found problematic.
Jefferies analysts said that Anglo must now execute its own proposed restructuring, which includes a demerger of the South African business, a sale or spin-off of its De Beers diamond unit, a sale of its metallurgical coal business and a review of its nickel business.
While the demergers and reviews do represent potential value, with Jefferies predicting a potential share price of 30.77 to 32.59 pounds from the de-mergers, it largely depends on Anglo’s ability to execute the restructuring without “significant value leakage.”
De Beers presents the greatest risk, given that the diamond unit could be sold or spun-off at a much lower valuation, which could also be the case for the metallurgical coal unit.
A demerger of Anglo’s South African assets is also expected to be rife with political and financial complexities, given that the assets face high regulatory risk in South Africa.
Jefferies’ downgrade of the stock was based on these risks, with the brokerage forecasting that Anglo’s restructuring will likely take longer than expected, at least 18 months.
But Jefferies analysts said they still expected a “considerably higher share price” from Anglo in the long-term.
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How are the major market averages (^DJI, ^IXIC, ^GSPC) feeling this morning after the Nasdaq’s big climb above 17,000 on Tuesday? Yahoo Finance’s The Morning Brief is here to help investors start their trading day off right as hosts Seana Smith and Brad Smith walk you through the top stories and market trends.
Hess Corp. (HES) shareholders approved the $53 billion buyout deal with Chevron (CVX). In other energy M&A news, ConocoPhillips (COP) is set to acquire Marathon Oil (MRO) in an all-stock deal valued at $17.1 billion. Tortoise Portfolio Manager Rob Thummel told Yahoo Finance that this deal came as a total “surprise.” Lastly, platinum miner Anglo American (NGLOY, AAL.L) rejected BHP Group’s (BHP) bid to extend their merger deadline.
Russell Investments President and Chief Investment Officer Kate El-Hillow sits down with the team in-studio to discuss the market’s momentum trade and the strength of this earnings season’s fundamentals.
This post was written by Luke Carberry Mogan.
Video Transcript
It’s 9 a.m. here in New York City.
I’m Brad Smith alongside Shana Smith and this is Yahoo Finance’s flagship show the Morning Brief Stock Futures right now.
They are in the red after the tech heavy NASDAQ, it closed above 17,000 for the first time here.
And ultimately, uh well, yeah, 35,000 is what we’re seeing here right now.
And ultimately dow Futures are singing the over 250 points with Wall Street poised to open lower this morning.
Treasury yields, pushing higher traders betting that the fed might actually not cut rates until November sticky inflation.
Will that is to blame the FS preferred inflation gauge PC is due out later this week and that will give investors a little bit more insight into the feds path forward.
Let’s get right to the three things that you need to know this Wednesday morning, your road map for the trading day YJ and for a and pro Superman and have more stock futures are falling after the NASDAQ closed above 17,000 for the first time.
Investors focus is shifting to a key inflation data later this week as expectations for the timing of rate cuts continue to see.
Saw with policymakers wary over sticky inflation.
We have to see if Friday’s PC print can help stops regain some momentum.
Plus investors are watching two major deals playing out in the energy space has shareholders voted to approve the $53 billion buy out by Chevron and Conical Phillips is acquiring marathon oil in an all stock deal valued at $17.1 billion.
Meanwhile oil prices are pushing higher and uh shares.
American Airlines under pressure while dragging down the airline sector this morning, American slashes Q two revenue, all the company navigates increased competition in the domestic market and a more cautious consumer.
The airline also announced it was parting ways with its chief commercial Officer.
Well, good morning, everyone.
Our top story this morning, futures pulling back this morning, the NASDAQ closing yet above another record high in Tuesday’s session, Wall Street tracking a rising treasury yields as investors keep their eyes on inflation concerns.
Dow futures.
They’re off more than 200 points in the S and P 500.
Also sliding here this morning.
We’re keeping a close tab, close eye on some of those futures activity.
As we mentioned the dow right now down by about 7/10 of a percent.
Yeah, the dow uh trading lower here, NASDAQ 100 also on track to to open the day in the red as well as the S and P got the S and P sliding below 5300, a few uh key levels here to watch.
But we also got to talk about some of the big deals that are taking place right now and some of the broader picture that’s going on and starting it off with some of the movement that we’re seeing within the energy space.
When you take a look at Chevron, a little bit of a move lower here and just by a fraction though off, just to the downside here, this coming after has shareholders actually approving Chevron’s deal to buy out the company.
Of course, this is a step forward.
But the question here is what exactly is going to happen to he guy on a stake and we know Exxon has very much been putting on the pressure and could have some plans here that could potentially cause the deal to implode.
So of course, that will be the focus here.
And then beyond that, you also got some news out of Conocophillips this morning, that’s moving lower by about 1% a deal here for marathon petroleum.
So again, some more consolidation within the energy space and that of course, could have uh I guess more ripple effects beyond just some of these bigger names and talk about further consolidation within energy.
Yeah, absolutely.
We’re also keeping a close tab on airlines here this morning as we’re taking a look at some of the, as we were toggling on over to these airlines, one of the huge things.
There we go.
Of course, they’re bound to be there.
Notably here, American Airlines, one of those major companies that we’re keeping tabs on here.
You’re seeing those shares down by about nine, nine and a quarter percent here pre market this after the Chief Commercial Officer is stepping down that person leaving the role.
And then additionally, you’ve got uh, more of a warnings for, uh, forecast for the, um, the forecast warning here that has come out from the company here.
So, uh, a lot of that being factored in at the same time, you’ve got some other movement in the space as well.
United catching a little bit of a bid upgrade there.
So we’ll continue to keep tabs on the airline space.
We’ll dive further out into that on today’s show.
But getting back to those two major deals in the energy space has shareholders officially voting in favor of the $53 billion deal to sell the company to Chevron.
And Koco Phillips has agreed to acquire marathon oil in a $17.1 billion all stock deal.
Yahoo finances and Es Farre has the breakdown on the sector.
Hey Innes.
Hey Brad.
Yes.
So first let’s start out with the shareholders which voted to approve the buy out by Chevron that was highly anticipated.
There are still a couple of steps though to this deal, in order for this deal to officially close.
First of all, the FTC regulatory approval has to go through and Chevron is expecting that to go through.
They have put out a statement.
Yes, there spoke spokesperson saying that they’re anticipating that FTC regulatory process to move through in conclusion in the coming weeks.
They also are anticipating that their preemption rights will be affirmed in arbitration.
This has to do with Exxonmobil, which Exxonmobil has taken these companies into arbitration because Exxonmobil is saying that they have the right of first refusal to that stake in Guyana, the very valuable crown jewel that hess has the reason.
The big main reason as to why Chevron wants to acquire Hess because of that stake in Guyana and that would be something that is in the coming months going to be happening with this arbitration.
And Chevron saying that they’re looking forward to completing the transaction and welcoming Hess to their company.
Still, the arbitration is pending here.
As far as the second deal is concerned, this is marathon oil and Conocophillips.
Conocophillips would be acquiring Marathon oil for $17.1 billion in an all stock deal a bit more than that.
If you include debt, this would also broaden Conic’s footprint domestically in the Texas region, in the North Dakota region.
Now, city analysts came out with their take on this.
They’re saying that this has been is not based so much on inventory and growth the way we’ve seen with this other consolidation that has taken on in this space with these bigger players, but this looks more about optimization and also lowering costs.
I spoke to other analyst this morning saying that this deal would be unlikely to face anti trust issues concerns because these companies together would still be smaller than the big major oil companies that we’ve been talking about in recent months.
They’re both considered independent oil companies and without downstream assets without refining distribution and retail guys.
All right, Anne, thanks so much for breaking that down for us.
We want to continue this conversation because oil deals and mergers that are in focus today.
This coming after has shareholders approving an all stock merger with Chevron Conocophillips agreeing to acquire Marathon oil deal making it the sector that rose in 2023 hitting the highest level in over a decade according to the US Energy Information Administration to break this all down.
Talk about some of the acquisitions that are taking place within this space.
We wanna bring in Rob Thumble.
He is the Tortoise Portfolio manager and managing director, Rob.
It’s great to see you here.
So let’s talk.
Let’s start with the Chevron and hes uh shareholder vote there from hes shareholders approving this deal to sold to Chevron.
Of course, this clears what is a major hurdle but other hurdles remain when you talk about Exxon’s involvement here, how exactly that could play out also FTC uh approval whether or not a deal is going to be approved.
So I guess how do you see what happens next?
And how likely is it?
Do you think that that Chevron is going to acquire house?
Yeah, that’s a good question.
So the next step is the FTC approval II I think you just saw ultimately the uh Exxon pioneer deal got, got through the FFTC process.
So you’d probably expect that the, that the Chevron S deal could, could obviously jump back over that hurdle.
But the biggest hurdle is as, and as, and you have been talking about which is, is the, the, what’s it gonna be the, the arbitration and the arbitration and the result of the arbitration drives everything.
If, if the, the arbiter rules uh that ex and CNN are entitled to, to a right of first refusal, then this deal will be, will be off because uh a a as everybody’s highlighted the crown jewel asset of this transaction is the guy on an asset.
And so, um now what’s the probability that’s really difficult to really handicap?
And, and the reason is this is nobody has read the joint operating agreement except for uh lawyers um at, at Exxon, at Co, at Hess and obviously probably a Chevron.
And so everybody, they have their interpretation.
I, I think ultimately though it’s probably good to have Chevron as a partner, I think Exxon would recognize that um as well as co um and, and so, II, I do think that the transaction can happen.
Um But, but it’s really predicated on, you know, probably a handful of words in this kind of super secret joint operating agreement that nobody’s been able to get their hands on.
So, without the Guyana assets, what is the evaluation of this, this price tag for the deal?
Well, well, it goes down a lot.
I mean, I mean, I, you know, I think, you know, he is up probably 20% since the, since the transaction was announced.
Um maybe even a little bit more than that, what I would say is, uh it’s not as if Guyana, Guyana is still worth uh uh a decent amount and, and, and that’s, that’s really the valuation is what’s the valuation?
And that, that’s really part of the arbitration is what is the value that Chevron is placing on Hess and, and does Exxon want to, and, and see want to pursue and pay that, that, that type of value?
But, but that takeover premium would come down.
Uh the he share price would come down if the transaction or if the arbitrator would rule in, in favor of Exxon um in, in this case sometime and, and we expect that sometime probably early next year.
I think the question is if, if Chevron is not able to acquire uh Guyana assets, does this deal then fall apart?
Would Chevron have any interest in Hes outside of the assets in Guyana?
I think the answer that’s no, I, I think Mike, we ceo of Chevron has made it very, very clear that without the Guyana asset, he he if the company is not interested in pursuing a uh uh the the acquisition and the merger with uh on without the guy on asset now, obviously, things can change.
But, but, but ultimately, uh the, the the guy on asset is the, is the critical asset uh for this transaction to occur.
So without it, I don’t think the transaction, uh All right, another transaction we’re tracking here this morning, Anglo American officially rejecting bhps request to extend the deadline for talks on its $49 billion takeover offer here.
I mean, just wanna get your reaction on this rejection here and what the signal is next.
Yeah, I’m not as familiar with that transaction but, but I can tell you there’s a lot of transactions going in the mineral space, in the, in the oil and gas space.
Uh and, and, and obviously valuation, I it is always probably the biggest hurdle when it, when it comes to a lot of these transactions.
So, so that’s probably the biggest driver of, of, of what, what’s causing this the uh potential disruption of this transaction.
All right, let’s talk about Conocophillips because that’s the other big deal that we’re talking about within the space.
Conocophillips and uh marathon petroleum, the merger there.
Talk to me just about one, what this is going to do to Conocophillips business here and then two, just what this tells us just about further consolidation, kind of go on what you were just talking about there before, but further consolidation within this space and the likelihood that this might remain a theme here for at least the quarters to come.
Yeah.
So this is a bit of a surprise and uh and I would say the reason and what I mean by that is I don’t think anybody probably had marathon oil being acquired by Conocophillips.
Um And, but, but when you look at it, uh it does make some sense.
So if you look at the marathon oil assets, they’re good, they’re not great.
But the management has really done a great job of the capital discipline and what that’s resulted in a is in a really high free cash flow yield for marathon oil.
So marathon oil actually has one of the highest free cash flow yields in the oil and gas space.
Um So that’s a bit attractive or that is attractive to somebody.
And, and obviously Conco Phillis is, is, has found it the most attractive at this point.
So when you merge these assets together, what, what Conocophillips gets is some good assets in, in uh you know, across the Bakken in North Dakota, across the Permian and the Eagle Ford in, in, in Texas.
But it gets a lot of free cash flow that it, that then uh can redeploy.
And I think what, what kind of go has done at Ryan Lance and the management have done, they’ve been really, really good at allocating capital.
And so now they’re just getting more cash to allocate whether that’s to shareholders or, or to future acquisitions.
Um, they, they’ve done a really, really good job of allocating capital and this just gives them more capital to allocate in the future.
Is this likely to, uh receive much regulatory scrutiny?
Do you think?
I think these all, all, all of these do, right.
But I, but I do think obviously less, it’ll, it’s a less uh less notoriety than a pioneer transaction or even a transaction.
But yes, it will go through the same process and uh and, and I, and I’m sure we’ll, we’ll go through the same uh rigor that all of these transactions have gone through at the FTC.
Really over the last three or four years, Rob Del Torres portfolio manager and managing director.
Thanks so much for taking the time here this morning, Rob.
Appreciate it.
Thank you.
Well, let’s go to the skies here.
American airline shares.
They are sinking this morning after cutting its sales outlook for the second quarter.
The airline also announcing its chief commercial officer will leave his role next month.
Yahoo Finance.
This pro superman has some of the details on this one for us stock sinking this morning.
Almost 10%.
Ross.
Yeah, yeah, you know the getting hit there and that revised outlook also seeing adjusted EPS for Q two in the one to dollar 15 range that was down for a dollar 45.
So big cut there for the current quarter.
Uh, the original points to some trouble here with summer travel when most airlines are sort of doing well.
Uh, now there are some issues that all airlines are dealing with.
Right.
Uh, Middle East tensions.
Consumers looking for more discounts than revenge traveler is sort of going away this, this summer.
But they still want to travel a little bit but they don’t want to spend uh exorbitant fees for it.
Uh And, but the American sort of revision revisions here with, with, with both profit and revenue, they seem worse than expected.
Plus he mentioned the chief commercial officer Vasu Raja leaving seems he made some bets on things like reducing long haul routes L A to New York which are really lucrative.
He started focusing more on the Sun Belt, which I think is good business but it’s not as lucrative as these bigger longer flights.
And the company needs some more general revenue.
They need more revenue.
It’s not, it’s not meeting expectations here for right now.
And it’s concerns why is this happening to American?
Is it just an American problem?
Yeah, and that is the question, is this an American problem or are we starting to see some of this weakness elsewhere?
When you take a look at some of the other larger domestic players we had, we had uh players like Ryanair talk about, uh, uh, consumers a bit more cautious but Delta, uh, United, they’re not warning about revenue.
They’re doing actually pretty, quite well these days.
I mean, I know Brad, you’re pretty close to Delta, you’ve heard the same as well.
So, I think it’s potentially an American issue.
Um, current CEO is known as a good operator, but they might need, uh, more of a sales stick to come in there and really kind of pump up uh sort of getting after that business consumer uh reestablished some of those longer haul flight routes which just take time and, and uh and from what I understand, they, they sort of diminished the New York to L A business, which was, which is a big business, but then also hard to build back up as you have.
Other, obviously Delta United are big there too.
So that’s sort of highlights some of the challenges Americans face right now.
Uh What’s one of the more prem airlines in the world?
Yeah, I mean, look when you think about the broader airline space here too, the, the larger thing for the summer travel is where companies have started to talk about where demand should be holding steady even as we’re kind of going towards this, this cruising altitude of normalization if you will versus what are some of the problems specific as you were laying it out to American Air versus some of the other airlines out there?
We still don’t know what the ultra low cost carriers are gonna have to navigate during this interim period of time as well.
But at least for this period, it seems like united, even as they had presented or at least given some of the updates going into the busy spring break and then summer travel season, they were seeing demand hold steady right now too.
So we’ll continue to track all of these.
But right now the American airline taking it on the Chin and a lot of the other major airlines down here as well.
In extended hours.
We’ll see where things open up process.
Thanks so much.
Well, we are just getting started here on the morning.
Retail round up Dick Sporting Goods are Ring after boosting his full year guidance and a Crombie shares, but they’re also in the green this morning after posting its strongest first quarter ever, we will speak with an analyst from U BS later on plus two shares are surging up just about a five for actually 12% for two in the back of its earnings report.
State t for a conversation with the company CEO that’s coming up on catalyst.
Next hour, all this and more.
You’re watching.
Yah Anglo American officially rejecting BHPS request to extend the deadline for talks on its $49 billion takeover offer.
The deal deadline will remain at 5 p.m. London time today.
You’re taking a look at the stock reaction here.
Uh pre market we’re seeing BHP group here flat just barely to the downside, Anglo American down by about 1.9% amid a wave of consolidation that we’ve seen in the broader energy sector and specifically oil and gas landscape right now, looking at Anglo American under just a bit of pressure off nearly 2% in pre market.
Now, this comes after like you were just saying they rejected the bhp’s request here for more time.
So what happens next?
So BHP has until 5 p.m. London time today to commit to an offer offer or walk away for six months.
And R BC analyst, uh Marina Collera was out with a quick reaction here noting the Anglo was already below the implied value of BH BS latest offer.
So she sees further pressure as the probability of an acquisition is repriced in terms of what could happen next.
Talk about a possible hostile takeover.
She’s saying that BHP is unlikely to go hostile given the complexity of this deal.
So again, you’re looking at BHP here in pre market up just over 1% on the flip side, you’ve got Anglo American those shares off nearly 2%.
But again BHP has until 5 p.m. London time today to commit to an offer or walk away for six months, right?
And just to further clarify, I should have said commodities landscape consolidation that we’ve seen because this is really more on the multinational mining elements of uh some of the commodities that of, of course are as Anglo American would say in their tag line, improving people’s lives.
So, uh ultimately, at the end of the day, this would kind of consolidate things like diamonds, platinum, copper, iron ore and so forth in some of the mining efforts there.
All right, let’s move on to the retail space.
A couple of big movers out today.
Let’s first start with Dick’s sporting goods jumping after raising its full year earnings guidance, the retailer seeing comp sales climbing over 5% in the first quarter up from a year ago, driven by heightened transactions.
So an increase in transactions, meaning more people are spending buying goods at the store to put it in plain English for everyone.
And again, you’re looking at the pre market trade up nearly 10%.
So why are they seeing this?
Right?
And we talked about some of the changes that have taken place under Ceo Lauren Hobart.
She has been expanding this new retail concept.
She’s renovating current stores.
She’s re relocating some stores as called the House of Sport location.
So it’s more of an experience.
These include batting cages, golf club repairs, management plans to boost spending on both e commerce and a physical location.
So those turnaround efforts, it looks like at least uh helping the stock, at least helping the business for now.
The retailer now expects the com sales are going to be up between two and 3% for the full year with EPS uh within a range of 3 30 1335 to 1375.
And again, you’re looking at a pop here ahead of the open.
Yeah, it’s really interesting here.
I mean, especially looking at the raise in the outlook, you just mentioned some of the specifics on there, but the demand profile that they’re seeing among consumers right now and that’s really pointing back to the products that they’re being able to bring into store here, product pipeline from some of their key brand partners in the vertical brand portfolio, they say has never been better.
So that points back to both the equipment and potentially on the apparel side uh where they’re seeing, for example, as they provide Nike’s recent Paris Innovation Summit highlighting breakthrough products across apparel and footwear that they look forward to bringing to their athletes.
Dick saying that in this release here and talking about some significant momentum that they’re forecasting about a differentiated product and compelling experience that they’re providing.
I just remember running around the track when I used to go into Dick’s sporting goods growing up, testing out out the shoes.
I mean, you gotta put it to the test and you just go for a quick sprint.
That’s the way to do it.
Let’s switch gears here and talk about Robin Hood that so is also turning check on Yahoo Finance this morning, announced a plan to repurchase as much as a billion dollars of its own shares over 2 to 3 year period.
Now, this buyback program is expected to begin in the third quarter.
This is significant because it’s the first uh stock buyback program announced by Robin Hood.
They’ve been rolling out a series of new features trying to cater to that new demand here for products.
So they’re looking to grow really beyond that start up phase, uh which is still pretty much referenced as, but this buyback really under how Robin Hood, I think is adopting a similar approach to kind of win over investors of those as other companies who are, who are a bit more mature, who have been around for a lot more time, obviously.
So they’re saying this as they’re very confident within the business, they’re looking to grow, they’re looking to reinvest, they’re looking to come up with new products.
And again, you’re looking at extended gains of nearly 1% here ahead of the open wave of buyback programs that we’ve seen first of their kind over the course of this earnings season here.
I think back to even as we were speaking with uh Kaufman from Fiver and their CEO yesterday, you’ve got fresh buybacks there.
You got a fresh buyback here on Robin Hood.
And so a lot of focus on, at least for the mindset of the investor that CEO S are trying to send and signal about the confidence of their business.
That’s typically where you see more of these announcements coming forward, especially if you see uh over an extended period of time, a lot of chop or volatility in shares and, and Robin Hood had seen that for a while coming into the start of this year.
But over the past year, take a look at that share price reaction here.
It’s up by about 100 32% fast past 52 weeks.
Uh But notably, I would be interested to see current quarter, uh, what they say after this quarter about what they’re seeing or saw within the broader kind of meme stock frenzy that once again reinitiated, I think that’s gonna be interesting to hear once they finally do report earnings again, but we’re gonna have to wait for that.
All right.
Well, you don’t have to wait for the opening bell on Wall Street.
That’s just around 3.5 minutes away.
So, keep right here on Yahoo financing.
You got much more of the early action ahead.
We’ll be right back.
All right, we’re taking a live look at the opening bells happening at the NASDAQ and the NYSC.
Hey, it looks like, uh, you’ve got the great folks at perspective ringing the opening bell at the NYSC.
Oh, and the winner of the Indie 500?
Joseph New Garden there, front and center ringing the opening bell at the NASDAQ.
You know, I went to Indianapolis for the first time this year and a lot of people are very happy about the Indy 500 there.
No surprise at all brings a lot of, yeah, it brings a lot of uh, a lot of cheddar to the um, local economy.
A lot of De Niro.
Yeah, money anyway.
No, I can’t say I am but I like cars.
So leave it there, checking out where things are opening here this morning.
We got the dow under a bit of pressure.
You got the S and P uh pulling back just a bit.
You can see falling there below 5300 on track to pull back there.
And the NASDAQ Composite closing at a record high closing about 17,000 this morning.
Uh giving back some of those late day gains and checking out some of the sector action, what we are seeing here this morning as we pull that up here, a bit of a mixed picture.
We talked a lot about, we have energy up on our screen because of some of the deals that are taking place here this morning ahead of the Open.
But again, you are seeing a lot of red, you have energy among the out performers.
I guess the best of the worst of the group here when it comes to the fact that we’re still looking at losses of about a half of a percent that along with communication services on the flip side though, if you got utilities under a pretty decent amount of pressure off just about 1% and real estate, a bit of a reversal here today from what we saw early in yesterday’s trading action that’s opening up just off, about 1%.
Jared By with a closer look at some of that movement that we’re seeing.
Jared.
Yes, it is off to the races for the NASDAQ.
So a very fitting opening bell there.
And by the way, I like cars too.
So I just wanted to show what the difference between the NASDAQ and the Dow mainly and also the S and P 500.
This is year to date.
And you can see we have accelerated to the upside right here.
But if we take a look at the dow, well, we just kind of exceeded these highs that we had in April.
Let’s see if I can draw on this.
There we go.
We got a little bit of a punch above, but then we dropped off pretty steeply and we’ve had some bigger losses.
We’ll take a look at that in a second.
Here is the S and P 500.
It is maintaining the highs and it is not broken through that big red candle that you can see there.
That was a bad day in the indices last week.
Uh We can also take a look at the transports pretty weak there and also the small caps.
Here’s the Russell 2000.
But I want to show you what’s happened with the bond market because I think this is really instructive and it’s counter intuitive what’s happening with the sector action.
So this is a year to date chart with the 10 year T note yield.
And over the last 10 sessions or so, we have screamed to the upside.
Now, we’re at the highest level since early May.
And in that time, I’m going to show you what has happened over the last seven days in the sectors.
Now we have tech and communication services.
Those are the only out performers.
Usually when you see going higher, you don’t see uh tech outperforming.
But that’s nevertheless, what is going on here.
And then you can see a lot of dark red real estate down 5% financials down four health care and energy down more than 3% and just peering inside the NASDAQ over the last seven days, you can see NVIDIA now up over 20% since its earnings release last week.
Um But I think uh we what we have here when the rest of the market is kind of fallen off a little bit.
You have this Invidia safety trade going on and maybe that’s what’s been holding up the market because if we take a look at the semi conductors over the last seven days, that is one of the few bright spots and there you have it again, NVIDIA leading the way.
So I’m going to take a brief look at what’s happening today and yes, all 11 sectors in the red here led to the downside by real estate and health care, but I’m going to be watching the Tenure Tino Yield and basically the US bond market for clues as to what might happen next in equities.
All right, Jared, thanks so much.
Let’s talk about the NASDAQ right now because it’s hitting its 12th or hit its 12th record close of the year.
A I really fueling the rally.
One of the biggest names in the story has been NVIDIA.
It’s contributed over 46% of the major averages returns a year to date according to Yahoo finance calculations.
Our next guest thinking that there might be some more room to run in the tech trade here to break it all down.
We wanna bring in Kate Hill Russell Investments, president and Chief investment Officer is here, Kate.
It’s great to have you.
So let’s talk about the ru the massive run up that we’ve seen in some of these tech names.
You talk about a lot of the fact that it’s been driven by only a handful of these larger cap tech plays.
What does that then tell us?
Do you think just about that momentum that we could see in the second half of the year, we still going to see some of this buying activity of these larger cap names?
Yeah.
Well, it’s always hard to call the end of a momentum trade, particularly when it’s supported by some good fundamentals.
And so you know, you’re hitting kind of a new high yesterday.
Yeah, I’d say, like, you know, continuing to add to that right now at these levels, you know, probably if you’re already a holder, you know, wouldn’t do, you know, as much.
But, you know, if you are, you know, you know, in it and, you know, trimming a little bit might make sense, particularly if you think that the A I, uh, trend or theme is a durable one.
And we do, and so you start to see some broadening out into other sectors.
And we’re seeing some of that, whether it’s in utilities, maybe that what we are seeing is the market opens, you know, today or some of the sectors that might be able to benefit from some of the A I productivity gains consumer and health care will probably be some of the first, you know, sectors to be able to see the benefit of it.
So we do see this, you know, still being a well supported trend that could continue.
Um you know, in the second half of the year, if we continue to see in future earnings periods, earnings growth as uh as we’re continuing to track up against whether or not we really do see a recession and a concerted consumer pull back here and no rate cuts then does no rate cuts matter to the markets.
Yeah.
Um I think a slow cut kind of scenario that might start at the back half of the year should be really good for risk assets, you know, cuts that are driven by obviously a recession, you know, have a very different impact.
But if you’re still seeing some, some strong growth and inflation starts to taper a bit and we’ll see what happens with core PC.
You know, at the end of the week is a signal, you’re having some cuts at the end of the year will be helpful but not necessary if you’re continuing to see some of the growth in earnings, even if it slows down a bit helpful.
To what extent, I mean, if, if we do see cuts, what does that then mean for future gains versus if we don’t see cuts?
Yeah, I mean, if you don’t see cuts but you don’t start to have some of this, you know, hawkish tone in terms of hikes.
I think you’re still focused more on the fundamentals and earnings and how companies are doing.
I think certainly more of an edge case if you start to see a concern about inflation coming up and the discussion on hikes coming back in that has a very impact on the market but no cuts at all with growth.
I don’t think it will have a big impact as people focus on the earnings and where we’re seeing the growth coming from, even if we did see some profit taking at these levels.
We were just talking about at the start of this segment some new record highs for the NASDAQ composite, if we did see rotation, where would that kind of flow into from your perspective?
Yeah, so, so I think it ends up being in, you know, consumers in health care, maybe absent some of the political considerations that will happen towards the back half of the year European financials, you know, is another area if you kind of shift out kind of globally where there might be some shifts.
But I think European financial is attractive right now.
Yeah, I mean, I think it’s just like the, the set up and you obviously have some challenges in in Europe from, you know, you know, maybe not as healthy as, as the US is and some cuts that could end up coming through.
But just from evaluation perspective, they could be in a, in a better position.
And I think there’s some, you know, cyclical kind of rotation that you could see there when you talk about the uh gap between the out performers and the underperformers is that set to widen.
If we don’t see the, if we don’t see the fed cut rates this year, I think if you have like higher for longer, it’s gonna start to hurt companies that handle this period.
Well, thinking that there was gonna be some relief coming and if you don’t see that both some of the higher leverage companies, small cap companies, but then even some of the consumers particularly low and middle income, it’s gonna start to pinch and I think that could, you know, start to hurt some of and widen the gap further when we talk about, uh, the performance that we will likely see here going forward.
And I guess what is going to be that massive driving factor we have earning season pretty much behind us now, is it, is it mostly going to be the fed that’s driving this intraday action and some of this volatility that we’ll see, at least in the short term, the shift to macro, you know, post earning season is definitely there.
Now, buybacks and other things now that that window is open may help support the market a bit, but it’s shifted back to to macro particularly as you start to have some of the, you know, the fed speakers, you know, coming in with a bit more of that hawkish to like people are, you know, focused on what’s going to happen.
Are we going to see these rate cuts?
Are we going to see this slowing kind of in the labor market that doesn’t, you know, it’s still a healthy labor market and healthy consumer.
But the back half of this year, if you start to see some slowing, I think that’s going to become a big part of the focus over the near term.
You mentioned the general election.
At what point do markets really start to pay attention to what’s being campaigned on?
What economic policies candidates are discussing.
Yeah, not until the, um, not until kind of the back half of the summer when you start to get the conventions and, and closer to the election, you know, at the end of the day and this won’t be a new thing like elections, you know, generally don’t move, you know, the, the market, you know, much in investors, you need to be focused on the policy shift, as you said and kind of which the administration and you know, whether the House and the Senate you stay aligned you or not.
But you know, right now we’ve got a lot more time.
It’s before it starts driving markets, Kate L Hillo, who is the Russell Investments, president and chief investment officer.
Thanks so much for joining us in studio.
Thanks so much.
Coming up everyone.
We’ve got a fresh pulse on the consumer and we’ve got a deep dive into Abercrombie and Fitch’s quarterly results.
On the other side of the break update, the stores don’t smell anymore.
They say at least that’s what our executive producers do.
Good vibes this morning for Apple Bank of America reiterated the company as the top pick, maintaining a buy rating and a price target of $230 on the stock B of A analysts are optimistic about the adoption of A I enabled phones.
They’re coming.
Dan Dan Yahoo Finance’s Dan Halley here to tell me whether or not these A I enabled phones are coming.
Are they, I think they call them in telephones.
Uh, that is, uh, yeah, in telephones you need to workshop that quotes.
Yeah.
Um, but I mean, look, this is something that Apple clearly has had to work on.
Uh, they don’t have any really generative A I capabilities right now that are doing anything.
Uh, they’ve been teasing this for some time.
Tim Cook has been teasing it, uh, on various, uh, earnings calls just because they’ve been left in the dust.
Microsoft has generative A I Google has generative A I meta uh Amazon, all of these companies are doing it.
Um uh some success, some floods here and there.
Uh but Apple has been the, the one kept out and so this is seen uh by a lot of analysts as potentially a kind of new driver for smartphone sales.
Now, do I feel that way?
Uh Not, not, well, I don’t, I, I, unless they show something at WW DC that’s like software driven that I think is gonna get people excited, then it’s not gonna do anything right?
People care about the camera, the screen and the battery.
Now beyond that, there’s gotta be some amazing software feature.
No one’s ever like, man.
Did you get that Siri update?
Have you ever heard anyone say that?
No, even when Siri came out, people were like, cool.
I’m sorry, I’m sorry.
Yeah, I just activated everybody’s phone.
Um But II I think if, if they can do something with the software that gets people actually excited, then it will be a driver.
Now, what does that look like?
I don’t know.
Right.
Because Samsung and Google already have generative A I capabilities on their own phones and it’s not really a reason for people to wanna buy them.
Right.
It’s more about the capabilities of the phones physically offer.
So I don’t necessarily know that this is going to be the driver that everybody hopes it’s going to be.
Uh unless it truly is something that Apple can say, look at how amazing this is compared to the rest of of what’s out there, this is going to get people to want to buy.
So Dan then how much is riding on the worldwide developers conference here next month?
Just in terms of if there’s any disappointment, what do you think the impact is or I guess what are analysts saying that the impact could potentially be here on Apple and the demand there for their phones at least in the near term?
Well, I think this is really uh a kind of setting up table stakes for like the future of of Apple and their software just because look, they’re already c is behind on this technology that’s changing things, right?
Microsoft showed with their uh their laptops that these are interesting technologies that can do a lot, right?
They have new features called things like recall uh that can kind of pull up anything you’ve been doing on your phone in the past, uh, you know, couple of years, uh, if you have the settings tweaked, right.
Uh, they’re, they’re doing cool, interesting things.
Um, Apple needs to offer that across everything, not just the iphone.
So if they don’t, if they disappoint, um, I don’t think it’s gonna get people to not buy an iphone.
Um, but I, I think it’s going to leave Wall Street and, and, and analysts saying, well, what gives is Apple, has Apple lost its edge?
And I think that’s more along the lines of what would happen is that the right way and going back to what you just said a minute ago, that Apple is very much viewed as maybe lagging when the comes to A I adoption in the A I race right now.
Is that the right way to view Apple at this point?
And I, I guess, is it a bit surprising just given the fact that you’ve covered the company for so long and it’s normally on the cutting edge when it comes to technological advances and adoption?
Yeah, I think, I think it’s a, I think when it comes to where they should be as far as at least having something uh to preview, right?
They’re, they’re behind, right?
But if you look at something like uh uh meta, they’re releasing these technologies as open source.
So it’s not really finding its way into too many products.
It’s more on the advertising side.
Um You know, Amazon, obviously, this is more about they have their uh Rufus uh A I assistant which is helpful but has its issues.
Um Google has launched Ja I it’s telling you to eat rocks, right?
So apple doesn’t want to do that, right.
That I think would be a bigger problem for apple and the perception of apple than it would be for, for something like Google.
Now, it’s a huge problem for Google because they’re supposed to be the source of trust online.
You don’t say let me Google this real quick because you don’t trust them, you do it because you do trust them.
So it’s a huge problem for Google.
Apple is all about fit and finish.
It’s all about delivering a product that people love and if they flo that, I think that would be a bigger problem than not having anything at all.
Nobody should be surprised that artificial intelligence is telling humans to eat rocks.
Yeah, I mean, look, eat rocks, eat paste.
It’s totally fine.
Uh And uh yeah, I mean, look, it’s not uh like you ever go to Google for anything important, you know.
So, well, we’re just going to leave it there.
Great with us here this morning for about 20 minutes into about 17 minutes into the trade.
You take a look at where things stand.
You’ve got the dow of nearly 400 points, a bit of a pullback here.
This morning, the S and P following further below 5300.
But the NASA take a look at that now off just around 7/10 of a first hand pulling back after, at another record high yesterday, above 17,000, we’re seeing a pull back just over 100 base points here this morning.
So again, some downward pressure across the board, we take a look at the sector action that’s reflected in the sector action to this morning.
All 11 of the S and P sectors here under a bit of pressure, real estate.
The worst performer of the group followed by financials and health care.
We’ll be right back.
Consumers still flocking to Abercrombie and Fitch name them shares.
Rallying on Wednesday after beating profit expectations and posting strong sales in the first quarter.
The company raising its full year sales outlook as demand across apparel and accessories continues to grow for a deeper dive into the results.
Yahoo Finance executive editor Brian Sozzi here with the breakdown.
Look, I I said name them but like I am one of them.
I made my my way in one of the stores like last week.
Yeah, this quarter, I just want to put this in context.
Um This is not going to be the norm from these retail earnings that are coming up.
We saw it when Walmart Report, we saw it from t reported a couple week ago, apparel is just soft and we saw it within Macy’s results.
So for Abercrombie again, to put up a, I would say mind blowing quarter is, uh, a very much an Abercrombie driven story.
So, what is this company doing?
Right.
It’s just getting its styles, right?
Uh, it’s keeping in its inventory under wraps.
This is a company that grew sales over 20% in the most recent quarter and its inventory was flat.
What is that telling you?
It’s that it’s just planning its business very well and it’s not overstocking items.
It’s putting new merchandise on the floor and the stuff is selling out.
Well, one area of the business that really caught me by surprise guys on the conference call moments ago was the wedding business is the business.
They recently launched Abercrombie and Fitch and it’s, uh, the Fran Hoitz CEO will talk to a little bit later on, uh, this afternoon saying it’s one of the hottest businesses they have right now can’t keep the stuff in stock and it’s not only that they’re coming in and buying wedding dresses, uh, from Abercrombie and Fitch or various wedding styles.
These are new customers in many cases to the Abercrombie brand and that is having that is sending customers to other areas of the store.
You know what?
That’s so interesting because it makes sense when you take a step back and think about it because it was really the millennial shopper who knew Abercrombie so well, decades ago, right?
And so now many of those people are in the age of, they’re getting married, they’re having weddings.
So why not buy at Abercrombie?
I didn’t even know I just pulled it up.
I pulled it up on my, on my computer right now.
I had no idea that they even had this business until you just said it.
But it makes sense because it also re the remaining committed to their loyal customers and they’re playing into that base that has worked well for them.
You see the film, you see the fitness.
Look, I saw, I saw the fit and I was upset because you were teasing this to us before.
And yeah, I didn’t see this coming at all.
They don’t have tuxes there though.
I was just there.
No tuxedos.
They’re not going to compete with the men’s warehouse.
But also interesting to uh Abercrombie noting on the conference call that they are now going to, I think now that their US business is solid.
Abercrombie’s working Hollister businesses finally start to turn they’re shifting their or shifting their sites to uh Europe, notably, uh Germany and the UK.
In fact, Fran Horowitz, uh saying she was just in the UK for and had their first annual board meeting there uh in, in quite some time.
So look for the company now to expand overseas a little more aggressively and thoughtfully and then also open up a good number of stores here in the US in the back half of the year we should clarify.
This is like wedding.
I’m still hung up on this wedding guest attire is what?
But they have stuff that you could wear for your wedding.
Walking down the aisle, rehearsal dinner, there’s a lot of stuff you could wear.
They get, yeah, get you geared up for your back.
I’m here to bring you this like a hashtag breaking news.
This one you can wear down the aisle, not me But yeah, if you wear head to toe, Abercrombie and Fitch, why not just live that wedding lifestyle and go out and buy one of these dresses you would, you, would you buy, would you get something from there?
Of course, why not?
I mean, it’s not bad.
Yeah, it’s not bad and it’s also a very affordable price point, especially when you compare it to some of the other.
I’m gonna put this to uh Ceo Fran Horace because I walk, walk by my latest, uh my recent my Abercrombie Fitch store, uh Roosevelt Mall and I didn’t see any of this stuff.
So I gotta ask her, what, where is this?
And why is not my store one?
Yes.
Yeah.
Maybe we should be buying more of these dresses.
I have no weddings to go to.
Nor am I getting married.
Not yet.
Nor do you need a dress any time any of that stuff on the wedding site.
But we’re gonna be asking Brian all of these tough questions.
We’re gonna have a deeper dive into the company’s latest earnings results.
Also the wedding business.
So has a heck of a lot of questions on that.
People come to my wedding.
That’s about it.
I mean, I know maybe one of my pets.
How about you?
Do you really want to come?
Good, uh Good gifts.
I give you for your another segment.
Great.
Thanks so much.
Coming up.
We are going to be taking a deep dive into the big deals in the energy space and what it means for the industry.
Plus the CEO of Chewy joining us here on set to talk consumer spending on pet some of the trends that he’s seeing within his business.
What it tells us about the health of the consumer that’s all coming up next on catalyst.
We’ll be right back.
Anglo American (AAL.L) has rejected BHP Group’s (BHP) request to extend the discussion deadline on its $49 billion takeover offer. BHP has until 5 p.m. BST Wednesday to commit to an offer.
Yahoo Finance’s Seana Smith and Brad Smith discuss the deal and its potential impact on the commodities landscape.
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Melanie Riehl
Video Transcript
Anglo American officially rejecting BHPS request to extend the deadline for talks on its $49 billion takeover offer.
The deal deadline will remain at 5 p.m. London time today.
You’re taking a look at the stock reaction here.
Uh, pre market.
We’re seeing BHP group here flat, just barely to the downside.
Anglo American down by about 1.9% amid a wave of consolidation that we’ve seen in the broader energy sector and specifically oil and gas landscape right now, looking at Anglo American under just a bit of pressure off nearly 2% in pre market.
Now this comes after, like you were just saying they rejected the BHP’s request here for more time.
So what happens next?
So BHP has until 5 p.m. London time today to commit to an offer offer or walk away for six months.
And R BC analyst uh Marina Clara was out with a quick reaction here, noting the Anglo was already below the implied value of BH BS latest offer.
So she sees further pressure as the probability of an acquisition is repriced in terms of what could happen next.
Talk about a possible hostile takeover, she’s saying that BHP is unlikely to go hostile, given the complexity of this deal.
So again, you’re looking at BHP here in pre market up just over 1%.
On the flip side, you’ve got Anglo American those shares off nearly 2%.
But again, BHP has until 5 p.m. London time today to commit to an offer or walk away for six months, right?
And just to further clarify, I should have said commodities landscape consolidation that we’ve seen because this is really more on the multinational mining elements of, uh, some of the commodities, uh, of of course, are, as Anglo American would say in their tag line, improving people’s lives.
So, uh, ultimately, at the end of the day, this would kind of consolidate things like diamonds, platinum, copper, iron ore and so forth.
In some of the mining efforts there
(Bloomberg) — Anglo American Plc said it won’t give BHP Group any further time to commit to a takeover offer, threatening to end a $49 billion pursuit by the world’s biggest mining company.
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The decision sets up a dramatic climax to the five-week battle between two of mining’s biggest names, just hours before a 5 p.m. deadline. Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but last week agreed to a one-week extension to a UK deadline in order to extend talks. BHP must now decide whether to make a firm offer without the support of Anglo’s board in the coming hours, or walk away for six months.
Anglo is opposed to BHP’s complicated deal structure and the two sides have been unable to find a solution. BHP made a last-minute push to pressure Anglo’s board earlier on Wednesday, citing commitments it has made to help get the deal approved in South Africa and saying it believed the risks were manageable.
Read: BHP Asks for More Time in Last-Minute Plea to Anglo
Just over three hours later, Anglo said its biggest concerns have still not been addressed.
“BHP has not addressed the board’s fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American’s shareholders,” it said. “The board has therefore unanimously concluded that there is no basis for a further extension.”
Anglo’s shares retreated as much as 7.6% after its statement before paring the losses to trade 1.7% lower. The stock is trading about 17% below the implied value of the most recent BHP proposal.
Bloomberg has previously reported that BHP had no intention of going hostile with an offer directly to Anglo’s shareholders, which would also require it to buy the whole of Anglo, including the South African businesses.
A successful takeover would create a commodities powerhouse that towered over its closest rivals, significantly increasing BHP’s copper production at a time when miners and their investors are positioning for a prolonged period of tight metal supply and rising prices. The bid has also cemented the return to large-scale M&A among the largest mining companies, after a string of disastrous deals left BHP and its rivals on the sidelines for over a decade.
If BHP walks away, the pressure will be on Anglo and Chief Executive Officer Duncan Wanblad to show that its turnaround strategy can generate more value than BHP was offering. The company, which was left vulnerable after a series of setbacks over the past year, has outlined a plan to exit coal, diamonds and platinum and slow down spending on a massive UK fertilizer mine.
Read more: BHP and Anglo Remain Split on South Africa as Time Runs Out
Anglo’s objections to BHP’s proposal have centered on South Africa, which has loomed front and center of a potential deal ever since Bloomberg first reported the takeover approach. It is home to some of Anglo’s biggest operations, employing tens of thousands of people, and the company has deep political and social ties to the country.
Anglo is concerned that BHP’s demand that it first exit Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. could leave the newly independent Johannesburg-listed companies to carry the cost of any concessions imposed by South Africa, reducing their value and ultimately penalizing the current Anglo investors who would receive the shares in the spinoffs. The multistep deal would require several layers of approval in South Africa, where deals are subjected to “public interest” assessment and authorities have a record of extracting substantial concessions from companies.
As a result, Anglo, which this month rushed out a radical restructuring plan of its own, wanted BHP to either change the structure or commit to cover any future costs to its own shareholders.
BHP said in its statement earlier on Wednesday it was confident the deal would be approved and that the risks are “quantifiable and manageable,” based on similar transactions.
BHP said it’s also willing to discuss paying a break-up fee if the deal isn’t approved, without giving a proposed figure.
It has agreed to share in the costs of any additional employee-ownership requirements of the South African businesses and make commitments on issues like charitable spending and local procurement in South Africa. BHP noted that it had “already factored the costs associated with these risks into the offer ratio of its proposal.”
Several of Anglo’s biggest shareholders said last week that they supported the company’s efforts to persuade BHP to change the structure of its takeover proposal or compensate for the risks it presented. Elliott Investment Management has also emerged as one of Anglo’s biggest shareholders, but has yet to comment publicly on the BHP proposals.
(Updates with context and shares.)
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International Distributions Services (IDS.L)
Royal Mail owner International Distribution Services said it has agreed to a £3.57bn ($4.56bn) takeover offer from Czech billionaire Daniel Kretinsky’s EP Group.
The offer consists of 360p in cash, plus a final dividend of 2p per share and a special dividend of 8p per share. Including debt, the deal values IDS at £5.28bn.
IDS said if the deal goes through Royal Mail would continue its universal service obligation to one-price-goes-anywhere first-class post six days a week, and keep the company’s branding and UK headquarters.
Read more: The tax pledges to watch for in the UK election
Read more: FTSE 100 LIVE – European stock markets head lower as Royal Mail agrees £3.5bn takeover
It also said it would protect existing employment rights of all IDS staff, and that there is “no intention to make any material changes to overall headcount or reductions in the number of frontline workers” beyond existing plans.
Nvidia (NVDA)
Heavyweight chip maker Nvidia surged by almost 7% to a new high this last session and is the number one trending ticker in pre-market trading as the AI darling eyes Apple’s (AAPL) spot as the world's second most valuable company by market cap, behind Microsoft (MSFT).
Nvidia shares soared to a record high on Tuesday, putting it close to overtaking Apple with Nvidia now valued at $2.8tn, just shy of Apple's $2.9tn. Shares finished the day above $1,140.
The milestone moment comes after Elon Musk’s artificial intelligence startup xAI said Sunday that it raised $6bn in a Series B funding round, sending Nvidia stock up as much as 8% the following trading day.
"The market has been struggling to keep up with the company's ever improving growth trajectory. At a mid-thirties forward earnings multiple, this still doesn't feel like bubble territory," said Derren Nathan, head of equity analysis at Hargreaves Lansdown.
The stock has now jumped by a third since the start of May, and by 137% over the year to date.
Anglo American (AAL.L)
BHP (BHP.L) has called for further extension to a bid deadline to allow for more talks over a £39bn takeover of rival Anglo American.
Under UK takeover rules, the Sydney-based company faces a deadline of 5pm UK time on Wednesday to make an offer for Anglo or walk away for 6 months.
"BHP believes a further extension of the deadline is required to allow for further engagement on its proposal,” it said.
The mining company said that it was ready to offer a break fee to Anglo American if the deal was blocked due to anti-trust reasons or if it failed to gain regulatory approval.
Read more: What's next for state pension? Sunak unveils 'Triple Lock Plus'
“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,” it added.
Anglo previously claimed the offers were too risky and complex. The latest bid valued it at £38.6bn. It came after BHP had put forward two prior bids, valuing Anglo at £31.1bn and £34bn respectively.
American Airlines (AAL)
Shares in American Airlines sunk over 15% after the company cut its guidance on second profit as softer demand is expected to dent revenue.
The Texas-based carrier now expects second-quarter adjusted earnings in the range of $1.00 to $1.15 per share, compared with its previous forecast of between $1.15 and $1.45 per share.
It forecast total revenue per available seat mile, a proxy for pricing power, to be down about 5% to 6% from a year ago. That compares with a decline of 1% to 3% expected earlier.
The airline also announced that its chief commercial officer, Vasu Raja, will leave the company next month. He has been in the role since April 2022.
American Airlines said its vice chair and chief strategy officer Stephen Johnson will take on Raja’s brief with immediate effect.
Jefferies, which had upgraded the company earlier this year over cost controls, said it was downgrading the stock to "hold" as "the strategy has not gone as planned."
Watch: Nvidia aiming beyond chips with AI ecosystem
Download the Yahoo Finance app, available for Apple and Android.
(Bloomberg) — BHP Group is seeking more time to discuss its $49 billion takeover plan with Anglo American Plc and outlined a series of commitments to the smaller company, with just hours left to go until a crucial deadline.
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The two miners are at an impasse over the proposed structure of BHP’s deal, which requires Anglo to first spin off its holdings in two South African companies before a takeover. Anglo says that the plan creates too much risk for its own investors, who will be left holding shares in the spinoffs.
Read More: BHP and Anglo Remain Split on South Africa as Time Runs Out
BHP outlined a list of proposals it says will ensure that Anglo’s shareholders don’t “disproportionately” bear the cost of the deal. BHP also said it’s prepared to discuss a break fee, which would be payable if it didn’t secure regulatory approvals.
However, the latest statement didn’t appear to address the biggest concerns cited by Anglo and its shareholders, regarding the potential loss of value in the South African businesses as a result of the spinoffs.
Anglo’s shares fell 1.3% to £25.25 as of 8:15 a.m. in London, to trade about 16% below the value implied by BHP’s most recent proposal.
On the measures it outlined on Wednesday, BHP said it has “already factored the costs associated with these risks into the offer ratio of its proposal.”
The measures included commitments to share in the cost of any requirements to increase employee share ownership of the South African businesses, maintain funding for Anglo’s charitable commitments and support local procurement in South Africa. BHP said it will maintain these measures for at least three years.
Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but last week agreed to a one-week extension to a UK deadline in order to extend talks. BHP now has until 5 p.m. London today to commit to a firm offer or walk away for six months.
From the moment BHP’s takeover approach first became public, South Africa has loomed front and center of a potential deal. It is home to some of Anglo’s biggest operations, employing tens of thousands of people, and the company has deep political and social ties to the country.
The structure of BHP’s proposal — which required Anglo to first spin off its South African platinum and iron ore units — has remained a crucial sticking point. Anglo wanted BHP to either change the structure or commit to cover any future costs to its own shareholders — who will end up owning the listed South African companies — as a result of the multi-step deal.
Earlier this month, Anglo rushed out a radical restructuring plan of its own.
Several of Anglo’s biggest shareholders said last week that they supported the company’s efforts to persuade BHP to change the structure of its takeover proposal or compensate for the risks it presented.
“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal,” it said in a statement Wednesday. The company said it “believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination.”
While the two sides have been getting closer on value, they have made little progress on the structure of the deal, Bloomberg reported Tuesday.
The outcome of this week’s talks could have far-reaching implications for the mining industry. BHP is already the sector’s most powerful company, and a successful deal would leave it towering over its biggest rivals.
The bid has also cemented the return to large-scale M&A among the largest mining companies, after a string of disastrous deals left BHP and its rivals on the sidelines for over a decade.
Why BHP Is Targeting Anglo in Mining Mega Deal: QuickTake
(Updates with details throughout and shares in fifth paragraph)
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(Bloomberg) — With just hours left on the clock, advisers for BHP Group and Anglo American Plc were still struggling to find a breakthrough to salvage BHP’s ambitious $49 billion takeover plan.
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BHP has until 5 p.m. London on Wednesday to commit to an offer, after Anglo agreed to extend a previous cutoff to allow for discussions. The two sides were getting closer on a value for a potential deal, Bloomberg reported last week, and BHP Chief Executive Officer Mike Henry has jetted into London for last-ditch meetings with investors ahead of the deadline.
Yet the key hurdle to any deal remains the same as it has for the past five weeks: BHP’s complicated transaction structure. Anglo argues that the requirement that it first spin off its majority stakes in two South African miners creates too much risk for its own investors who will end up holding those shares, and wants BHP to either change the structure or compensate its shareholders for any loss of value as a result of the spinoffs.
Read more: BHP Has a Week to Convince Anglo Its South African Plan Can Work
The two sides have struggled to find a resolution to the impasse, according to people familiar with the matter, who asked not to be identified because the talks are private.
The situation remains fluid and could change at any point. But with time running out, BHP will likely need another extension to the UK regulatory deadline to keep its bid alive. As things stand, there’s no guarantee that Anglo will make that request, the people said.
“There’s still a lot to play for on both sides. My first assumption is that they will kick the can down the road,” said Glyn Lawcock, head of resources research at Barrenjoey in Sydney. “Anglo directors have to be cognizant of what is on the table. If they knock this back, they will have something to live up to. It’s a stake in the ground.”
The outcomes of this week’s talks could have far-reaching implications for the mining industry. BHP is already the sector’s most powerful company, and a successful deal would leave it towering over its biggest rivals. The bid has also cemented the return to large-scale M&A among the biggest mining companies, after a string of disastrous deals left BHP and its rivals on the sidelines for over a decade.
The negotiations will determine the fate of one of mining’s oldest companies. Anglo American, which traces its roots in South Africa to its founding 107 years ago, was left vulnerable to BHP’s approach after a series of setbacks over the past year that depressed its share price. While rebuffing BHP’s approaches, Anglo announced its own dramatic restructuring plan that would see it exit diamonds, coal and platinum — including the South African platinum firm that BHP wants it to spin off.
Read more: Anglo-BHP Battle Is Between Two CEOs Fighting Over Same Vision
From the moment BHP’s takeover approach first became public, South Africa has loomed front and center of a potential deal. It is home to some of Anglo’s biggest operations, employing tens of thousands of employees, and the company has deep political and social ties to the country.
Anglo is concerned BHP’s demand that it first exit Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. could leave the newly independent Johannesburg-listed companies to carry the cost of any concessions imposed by South Africa, reducing their value and ultimately penalizing the current Anglo investors who would receive the shares in the spinoffs.
People close to Anglo said that BHP has failed to acknowledge the scope of the execution risks of its deal structure and that the company needs to make material changes to its proposal. So far BHP has failed to do that, the people said.
However, people with knowledge of BHP’s position countered that Anglo has yet to lay out exactly what the issues are, preventing them from providing clear remedies. Advisers to the company are frustrated that Anglo is presenting unquantifiable and unspecified obstacles to the structure.
Spokespeople for Anglo and BHP both declined to comment.
Anglo’s shares fell 2.2% on Tuesday, to trade 14% below the value implied by BHP’s most recent proposal. BHP’s Australian shares were virtually flat in early afternoon trade on Wednesday in Sydney.
BHP has targeted Anglo primarily for its copper mines, and the combined company would easily become the world’s biggest producer of the metal essential to decarbonize the global economy. Benchmark copper prices hit a record last week and have surged about 23% this year.
Anglo, under CEO Duncan Wanblad, has provided its own plan to focus on copper mines and iron ore, its two biggest and most consistent earners and the businesses that BHP is most attracted to. It will also stick with its Woodsmith fertilizer project in the north of England that some investors have pushed for it to quit, while dramatically cutting spending.
Henry and Wanblad also have a large group of shareholders in common, who could have the ability to pressure either side to find a way to make a deal, or alternatively draw the line and end negotiations.
(Adds analyst comment in 6th paragraph, Australian shares)
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Sterling has jumped to hit its highest level against the euro in almost two years amid expectations of sharper interest rate cuts in Europe.
The pound was trading at its strongest level against the euro since August 2022 on Wednesday morning, rising as much as 0.3pc.
The latest rise follows weeks of sterling strengthening against the common currency. It has gained almost 0.6pc against the euro over the past month on expectations that the Bank of England will be cutting interest rates less sharply than policymakers in the EU.
Higher interest rates draw in money from around the world as investors seek higher returns, pushing up a currency.
Traders are expecting the European Central Bank to be one of the first major banks to start cutting interest rates, with the first to come as soon as next month.
ECB chief economist Philip Lane this week told the Financial Times: “Barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction.”
Markets are pricing in at least two reductions by the ECB this year.
The Bank of England, meanwhile, is only expected to cut rates once this year. It follows strong services inflation figures last week, which spooked traders who pushed back their prediction for the first reduction in interest rates from 5.25pc from June to November.
The upcoming election has also meant few people are expecting an imminent interest rate cut. Since becoming independent in May 1997, the Bank of England has never cut rates immediately before a general election.
Read the latest updates below.
06:39 PM BSTSigning off…
Thanks for joining us today. We’ll be back in the morning from around 7am to cover the latest in the markets but in the meantime, do check out our wider Business coverage.
06:12 PM BSTEuropean Commission to postpone Chinese electric car tariff decision
The European Commission will postpone its decision on Chinese electric vehicles tariffs until after the European elections on June 9, German magazine Spiegel reported today, citing sources familiar with the matter.
The provisional tariffs, expected to be announced by June 5, could represent billions of dollars in new costs for Chinese electric car makers.
The delay aims to keep the issue out of the election campaign phase, Spiegel said.
The investigation, officially launched on October 4, can last up to 13 months. The Commission can impose provisional anti-subsidy duties nine months after the start of the probe.
The European Commission has warned three Chinese electric vehicle makers that they have not supplied sufficient information for its anti-subsidy investigation, two people familiar with the case told Reuters earlier this month.
06:10 PM BSTSony Music in talks to buy Bohemian Rhapsody and other Queen hits
Sony Music is in talks to buy Queen’s music catalogue and merchandising rights, in a deal that could total $1bn (£790m), according to a report.
Bloomberg said that Sony is working with an unnamed investor on the purchase of hits such as Bohemian Rhapsody and Killer Queen. The transaction could be one of the largest-ever deals of its kind.
It follows a wave of artists cashing in their back catalogues.
In February, Sony bought half of Michael Jackson’s music catalogue for at least $600m, two years after buying Bruce Spingsteen’s back catalogue for a reported $500m.
Sony Music is the second largest of the “Big Three” record companies, behind Universal Music Group.
A spokesman for Queen declined to comment. Sony Music was approached for comment.
Freddie Mercury and Brian May of Queen performing on stage in an archive photo – Phil Dent/Redferns05:37 PM BSTHome ownership for young adults rebounds
Home ownership amoung young people has rebounded to its level in 2010, but is still much lower than in the 90s, according to new data from the Institute for Fiscal Studies (IFS).
Jonathan Cribb, an IFS economist who specialises in retirement and savings, writes:
Homeownership for young adults fell continuously from 2000 through to 2015, most significantly during and immediately after the Great Recession. This fall was concentrated in particular on middle-income people.
Since 2015, there has been a gradual recovery in homeownership for young adults, rising by 6 percentage points back to 39pc by 2022–23, the same level it was in 2010–11. This recovery has also been concentrated on middle-income people.
The reasons for the recovery are not immediately clear, though it is noticeable that disposable incomes of young adults have grown markedly faster since 2015 than those of the population as a whole.
Despite the positive news since 2015, it is clear that the recovery is partial at best, with homeownership rates for 25- to 34-year-olds still 20 percentage points lower than in 2000.
05:28 PM BSTLondon stocks fall on interest rate worries and the end of a takeover bid
London’s blue-chip stocks dropped today for the sixth straight session as traders pared back bets on the timing of Federal Reserve interest rate cuts, while Anglo American fell after Australian resources giant BHP Group walked away from its $49bn (£38.5bn) takeover pursuit.
Anglo shares fell 3.0bn. Earlier in the day Anglo rejected BHP’s last-ditch request for more time to discuss a takeover offer, dismissing it as highly complex.
The blue-chip FTSE 100 closed 0.9pc lower, in its longest losing streak since August 2023.
Meanwhile, the mid-cap FTSE 250 also ended 1.3pc lower, logging its worst day in over a month.
US Treasury yields rose after data showed a sharp improvement in US consumer confidence measure for May that prompted investors to lower their bets on a rate cut in September.
Fiona Cincotta, senior market analyst at City Index, said:
The rise in yields reflects sticky inflation concerns and higher interest rate expectations after stronger-than-expected U.S. consumer confidence data yesterday and hawkish commentary from Federal Reserve officials.
05:24 PM BSTEuropean shares suffer worst day in over six weeks as rate jitters persist
European shares declined today as worries that global interest rates will stay elevated for longer pushed bond yields higher, with fresh evidence of persistently high inflation in the region’s biggest economy only exacerbating such concerns.
The pan-European Stixx 600 index – which includes some UK heavy hitters – closed 1.1pc lower, touching a three-week low, clocking its biggest single-day fall since April 16.
There were steep declines in all major bourses in the region, with France’s Cac 40 index and Italy’s FTSE MIB leading losses with a roughly 1.5pc drop each.
The yield on the 10-year bund, considered Europe’s benchmark, rose to an over six-month high and was last at 2.685pc after German inflation increased slightly more than forecast to 2.8pc in May.
Dan Boardman-Weston of BRI Wealth Management said:
What you’ve seen over the last few weeks is that this “higher for longer” narrative in terms of interest rates has come back to the fore.
04:54 PM BSTFootsie closes down
The FTSE 100 closed down 0.9pc today. The biggest riser was mining company Fresnillo, up 2pc, followed by insurer Beazley, up 1.3pc. The largest faller was Ocado, down 12.3pc, followed by components supplier RS Group, down 4.5pc.
Meanwhile, the mid-cap FTSE 250 fell 1.1pc. The top riser was Ithaca Energy, up 8.4pc, followed by Royal Mailer owner International Distributions Services, up 4.3pc. The biggest faller was IWG, down 11.1pc, followed by National Express owner Mobico, down 6.7pc.
04:24 PM BSTOil giant ConocoPhillips buys rival in £18bn deal
US energy giant ConocoPhillips announced this afternoon that it will buy competitor Marathon Oil in an all-share transaction valued at $22.5bn (£17.7bn), including $5.4bn in debt.
The deal is the latest in a series of acquisitions in the US oil sector which run counter to calls to begin their energy transition as climate change takes hold.
It will enable ConocoPhillips to strengthen its position in shale oil and gas-rich regions such as the Bakken Basin in the northern US and the Permian Basin in the south.
The acquisition “further deepens our portfolio and fits within our financial framework, adding high-quality, low cost of supply inventory,” ConocoPhillips boss Ryan Lance said.
The deal represents a 14.7pc premium over Marathon Oil’s closing price on Tuesday.
The deal should see ConocoPhillips achieve savings of $500 million in the year after, according to a statement, largely due to reduced administrative and production costs.
In the UK, ConocoPhillips operates a major oil terminal in Teesside and a commodities trading unit in London.
04:14 PM BSTBritish chip giant Arm unveils new AI chip designs
Cambridge-based Arm Holdings today unveiled new chip blueprints and software tools to help smartphones handle artificial intelligence tasks, along with changes to how it delivers those blueprints that could help speed their adoption.
Arm’s technology powered the rise of smartphones and is increasingly found in laptops and in data centers, where chip designers have gravitated toward its energy efficiency.
Smartphones remain Arm’s biggest single market, where the company supplies intellectual property to arch rivals such as Apple and Android chip suppliers Qualcomm and MediaTek.
Earlier today, Arm launched new designs for central processing units (CPUs) that it said are better suited to AI work and new graphics processing units (GPUs). It will also provide software tools to make it easier for developers to run chatbots and other AI code on Arm chips.
But the bigger change is in how those products are sold. In the past, Arm mostly delivered its technology as either specifications or abstract designs that chip companies then needed to turn into a physical blueprint for a chip – which in turn is no small task when deciding how arrange billions of transistors, the tiny switches that make up chips.
For the new products, Arm worked with Samsung and Taiwan Semiconductor Manufacturing Company to deliver blueprints of physical designs that are ready for manufacturing.
Chris Bergey of Arm said the company is not trying to compete with its customers. It is instead trying to help them get to market faster while focusing on other increasingly important parts of both PC and phone chips, such as a neural processing units (NPU) that provide the best AI performance.
ARM boss Rene Haas holds the Nasdaq Opening Bell Crystal at Nasdaq MarketSite during the company’s second IPO, in New York last September – Richard Drew/AP Photo04:07 PM BSTIWG founder sells £68m stake in office company to pay off bank loan
The chief executive and founder of the shared workspace provider International Workplace Group (IWG) has sold a £68.5m stake in the company to pay off a bank loan. Adam Mawardi reports:
Mark Dixon offloaded 35m shares in the flexible workspace provider at 196p each through his wholly owned investment vehicle, Estorn.
The funds raised were used to repay a lending agreement between Estorn and Deutsche Bank’s Luxembourg business, according to an update shared with investors.
Mr Dixon remains the IWG’s largest shareholder following the sale, with 25pc of shares worth about £470m. According to the Sunday Times Rich List, published this month, his net worth is £923m, making him the 177th richest person in Britain.
Shares in the FTSE 250 company plunged as much as 10pc following the announcement.
It follows reports that Mr Dixon pledged 270m shares in IWG as collateral for a Deutsche Bank loan, the size of which has not been disclosed.
Last month IWG said revenue was flat at £912m during the first quarter of 2024 compared with the same period a year earlier.
Mr Dixon founded the IWG, formerly Regus, in Brussels in 1989 to provide desks for executives on the move after spotting businessmen holding meetings around coffee tables in hotels.
The WeWork rival, which is registered in Jersey, now operates 3,500 shared offices in 120 countries.
Mark Dixon of IWG, pictured in 2004 – Marina Imperi04:03 PM BSTOil prices volatile ahead of oil cartel meeting
Oil prices have been volatile today as traders attempt to second-guess a meeting of oil cartel Opec+, which is being held on Sunday.
Opec+, made up of the Organisation of the Petroleum Exporting Countries along with allies including Russia, will be discussing whether to extend voluntary cuts in production after soft demand.
Oil stocks among the Opec countries stood at 2.79bn barrels in March, up 20m barrels on the month and 34, barrels on the year, despite Opec+ cuts, according to preliminary data from Opec in its May oil market report.
“The physical market is well supplied while demand is slowing down,” a second Opec+ delegate said.
Inventories in non-Opec countries rose in March for the first time since November, the International Energy Agency (IEA) said, although in contrast to Opec, it reported Opec stocks at their lowest levels in 20 years.
The two forecasters produce their own estimates but tend to revise figures as more data becomes available, bringing them more in line.
Giovanni Staunovo, a commodity strategist at UBS, told Bloomberg:
Traders are likely following the momentum in the market and don’t want to get caught out short in case there are any surprises next week. Oil demand growth is healthy, and the fundamentals are solid enough to support prices.
03:39 PM BSTNational Express owner drops 6pc as after being slated for relegation from the FTSE 250
The owner of National Express have dropped over 6pc in trading today after a difficult year on the stock market means the transport company is likely to be removed from the FTSE 250.
Mobico shares have falled 47pc over the past year.
The result was that yesterday FTSE 250 indexers FTSE Russell put the company on its list of indicative deletions from the index.
A National Express coach at Victoria bus station – Justin Tallis/AFP03:25 PM BSTShares fall as outlook for rate cuts dims
Stock markets fell Wednesday as indicators and comments from central bankers further dented hopes for interest rate cuts, while oil kept rising after an attack on a ship in the Red Sea stoked supply worries.
Many investors sought to lock in recent gains ahead of a series of crucial inflation data reports at the end of the week in the eurozone and the United States.
A forecast-beating report Tuesday on US consumer confidence further added to evidence that the American economy is not slowing fast enough to allow the Federal Reserve to cut borrowing costs any time soon.
A higher-than-expected inflation report in Australia today soured the mood in Asian trading.
In addition, US Treasury yields – a proxy for interest rates – moved higher.
All three major US indexes opened lower in New York.
Providing more gloom, US central bank official Neel Kashkari warned that decision-makers had not ruled out a possible hike if they continue to struggle to bring prices down to their two percent target.
His comments come after several other Fed officials have recently said they were cautious about cutting too soon and wanted to see more data proving inflation was coming back down to two percent.
A person stands in front of an electronic stock board showing Japan’s Nikkei index at a securities firm in Tokyo yesterday – Eugene Hoshiko/AP Photo03:12 PM BSTPets at Home profits drop as pet owners hold back on toys
Shares in Pets at Home jumped this morning but are now slightly down compared to when the market opened as investors mull its latest results.
The results for the year to March 28 revealed a pre-tax profit of £105.7m, down 13.7pc on the same period last year.
It said profitability was “impacted by short-term availability issues as we transitioned to our new DC (distribution centre) and weaker performance of discretionary accessories”.
It comes after the group cut its profit guidance in January in the face of slowing retail demand.
Pets at Home reported that total group revenues grew 5.2pc to £1.5bn for the year.
Adam Vettese, analyst at investment platform eToro, said:
Inflation pressures have led to pet owners holding back on toys and accessories for their furry friends, profitable items which really affect Pets at Home’s bottom line.
The firm has said they have a plan to resolve this situation, partly caused by now rectified distribution issues, which shareholders will want to see progress on by the next update.
The dividend has been held steady and £25m buybacks have been announced for next year, which may be of some comfort to investors who have seen the share price get a 30pc haircut since July last year.
Pets at Home has revealed a dip in profits – Mike Egerton/PA02:53 PM BSTAbercrombie ups sales forecasts amid brand revamp
US retail chain Abercrombie & Fitch has upped its sales forecasts for the year, saying it now expects growth of around 10pc, rather than between 4pc to 6pc.
The company said sales in both its Abercrombie and Hollister stores bounced in the latest quarter, rising 29pc and 13pc respectively on a comparable store basis.
It follows a major turnaround in the fortunes of the business, which has been focusing on attracting a more diverse customer base with more classic styles, a bigger range of sizes and, recently, wedding attire.
Abercrombie has been repositioning itself, having once been known for posting male models at its store doors.
Former chief Mike Jeffries claimed in 2006 that this was because “good-looking people attract other good-looking people, and we want to market to cool, good-looking people”. “We don’t market to anyone other than that.”
Abercrombie used to use male models to help get customers into stores – Daniel Acker02:22 PM BSTDubai bidder makes final offer for Wood Group after series of rejections
Dubai-based oil services company Sidara has made a final offer of 230p per share for North Sea rival Wood Group, after its three prior bids were rebuffed.
Sidara said its fourth offer was at a 52pc premium to Wood Group’s share price before its first approach, adding that Wood had not engaged with it since then.
Sidara has until June 5 to say whether or not it is making a firm offer “unless this deadline is extended with the consent of Wood and the takeover panel”.
Sidara said it “does not believe that its proposal can be progressed unless the board of Wood engages with Sidara and an extension to the deadline is granted”.
It comes a year after Wood was involved in another takeover battle, with Apollo made a series of approaches.
01:59 PM BSTBingham-backed biotech bought in deal worth up to $3bn
A London biotech co-founded by Britain’s vaccine tsar Kate Bingham has been snapped up in a multi-billion pound deal, in a move bosses claimed could revolutionise the treatment of blindness.
US company Merck, which is known as MSD in the UK, said it would be paying an initial $1.3bn (£1bn) for Eyebio. The deal includes a potential further payment of $1.7bn if certain targets are hit.
MSD’s swoop comes three years after Eyebio was founded, with Dame Kate telling the Financial Times it was “astonishing” to have achieved such a high valuation in such a short space of time. Since the company was founded in August 2021, Eyebio has only raised $130m.
Dame Kate’s venture capital firm SV Health Investors set up the business together with scientists David Guyer and Tony Adamis. Dame Kate acts as chairman of Eyebio.
Her involvement in the company has boosted its profile, with Dame Kate having been among the leading architects for Britain’s vaccine rollout during the pandemic.
Dame Kate was brought in to steer the UK’s Vaccine Taskforce in early 2020 and was given a damehood in recognition for her success in acquiring Covid-19 vaccines. It meant the UK was the first Western country to start vaccinating citizens in late 2020.
Kate Bingham – Andrew Crowley01:34 PM BSTGerman workers handed record pay rise
German workers were handed a record pay increase at the start of the year, new figures from the country’s statistics office showed on Wednesday.
According to the data, there was a 3.8pc rise in real wages in the first three months of the year compared to the same period a year earlier.
It marks the biggest jump since at least 2008. The European Central Bank is monitoring inflationary pressures in the bloc amid expectations of an imminent interest rate cut.
The figures suggested that the increase was driven by one-off payments, and as workers caught up to losses incurred when consumer prices rose faster than their salaries.
12:56 PM BSTEvening Standard scraps daily print paper as it blames work from home
The Evening Standard is to stop printing a daily newspaper, blaming working from home and increased WiFi on the London Underground.
As James Warrington writes:
The London freesheet told staff on Wednesday it will scrap its daily print edition and become a weekly title instead.The Standard, which is owned by Russian-born billionaire Lord Lebedev, has been struggling for direction in recent years after being hammered by a collapse in commuting and a deep advertising downturn during Covid lockdowns.The rise of home working and increased mobile and WiFi signal on the London Underground have also hit its readership.In October, print circulation dropped below 300,000 for the first time since it became a free newspaper in 2009.
12:27 PM BSTHarry Potter publisher strikes ‘game-changer’ US deal
The publisher of Harry Potter has struck a deal to buy a US rival, saying the move would be a “game-changer” which will help accelerate its expansion overseas.
Bloomsbury is swooping for Rowman & Littlefield in a £65m deal, which is said marked its biggest acquisition to date.
Nigel Newton, Bloomsbury’s chief executive, said: “Their 40,000 academic titles added to ours will make us a significant US academic publisher, growing Bloomsbury’s academic and digital publishing presence in North America, opening new markets and publishing areas to Bloomsbury, and is a key milestone in the delivery of our long-term growth strategy.”
Dan Coatsworth, an investment analyst for AJ Bell, said it was a sign of Bloomsbury seeking to diversify. He said: “Bloomsbury has come a long way from the days when its fortunes were almost completely tied to the Harry Potter franchise and today’s acquisition of a US academic publisher accelerates the company’s diversification strategy.”
Harry Potter books12:02 PM BSTUnion boss criticises Royal Mail over mismanagement
CWU General Secretary Dave Ward hit out at Royal Mail’s management on the Today programme.
General Secretary Dave Ward on the today programme today calling our the gross mismanagement from the Royal Mail Board which has destroyed postal services in the UK. Only workers and customers can rebuild it. pic.twitter.com/ntESZ6qUmR
— CWU (@CWUnews) May 29, 2024
11:45 AM BSTAdmiral Taverns strikes £18.3m deal for more pubs
Pub company Admiral Taverns has struck a deal to buy 37 pubs from Fuller’s as it bolsters its position in the south-east of England.
Admiral said it would pay £18.3m for the portfolio of pubs, which span sites in London, Surrey, Sussex and Hampshire. It means Admiral will now have more than 300 pubs in the south-east of England.
Chris Jowsey, CEO of Admiral Taverns, said:
Despite the complexities of the macro economic environment, across our estate we are seeing community pubs, and specifically wet-led establishments [ones that focus on drinks], maintaining their popularity amongst locals as people continue to enjoy going out for an affordable treat with family and friends. Wet-led, community pubs have demonstrated real resilience over recent times, and we remain optimistic that our nurturing ethos, entrepreneurial licensees and high-quality estate continues to position the group well to be at the forefront of opportunities in our wider market.
11:28 AM BSTDo not switch to autopilot on rate cuts, ECB warned
The European Central Bank should not switch to “autopilot” on how they cut interest rates, one of its governing council members has said.
Latvian official Martins Kazaks said it was “still key” that the ECB rely on incoming economic data on future rate cuts. It is expected to lower borrowing rates as soon as next month.
Speaking at an MNI Connect conference, Mr Kazaks said: “Keep calm, steady hand. Wages-productivity-profit margins to watch carefully.”
He said it was “too early to declare victory on inflation”, adding that the “‘last mile’ may still be rather bumpy”.
11:18 AM BSTAnglo American shares slump on extension rejection
Shares in Anglo American have slumped as much as 7.6pc on the news it will not be giving BHP any more time to commit to a takeover offer.
It comes after the takeover discussions provided a bump to its value. Since BHP made an initial approach, shares in Anglo American are up more than 16pc.
10:24 AM BSTAnglo American rejects request for BHP deadline extension
Anglo American has rejected a request by BHP to extend takeover talks, saying there was “no basis” for it to push back a deadline.
In a statement after BHP requested the extension this morning, Anglo American said: “BHP has not addressed the Board’s fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American’s shareholders.
“Also taking into consideration detailed feedback from the board’s extensive engagement with Anglo American’s shareholders and stakeholders, the board has therefore unanimously concluded that there is no basis for a further extension to the deadline.”
10:16 AM BSTGovernment clearance ‘major hurdle’ to Royal Mail deal, analyst says
Liberum analyst Gerald Khoo has suggested that Royal Mail’s takeover could be blocked, despite it getting approval by the IDS board.
Mr Khoo said: “We still see government clearance under the National Security & Investment Act as a major hurdle.“Our expectation is that an appropriate review of the proposed takeover could be lengthy. Even if that were not to be the case, any decision would fall foul of the pre-election prohibition on making long-term decisions that would tie the hands of the next government.“Our base case remains that the deal gets blocked by the government.”
10:02 AM BSTFunding Circle cutting 120 roles in cost-cutting drive
Business lender Funding Circle is cutting around 120 roles in a cost-cutting push, as it announced its chief financial officer was also stepping down.
Funding Circle said it was aiming to save around £15m worth of costs in 2025 by cutting swathes of roles. It said this was part of its “ongoing commitment to profitability”.
The changes will mean it incurs around £5m in costs in the current year.
Lisa Jacobs, chief executive, said: “We are pleased to report continued momentum on the path we set out in March to become a simpler, profitable business. The reduction in roles is not a decision we took lightly, and I would like to thank all the departing team for their hard work and commitment.”
It announced the job cuts as it revealed its chief financial officer, Oliver White, would also be stepping down later this year.
Mr White will be replaced by Tony Nicol, its current director of finance and investor relations. The transition will start after it publishes its interim results in September, with Mr White to leave its board at the end of this year.
09:44 AM BSTPets at Home ‘not threatened’ by vet market investigation
Pets at Home said it is “not threatened” by an investigation into the vet market by the competition watchdog, after its revenues were boosted by more visits to clinics.
The company shrugged off any hit from the ongoing review by regulators into how the vet market operates.
Last week, the Competition & Markets Authority kicked off an official investigation amid concerns that customers are getting a bad deal.
It suggested pet owners should consider buying medication online to try avoid being overcharged.
Pets at Home said: “We believe that our vets growth strategy is not threatened by the CMA’s review into the vet sector. Our key building blocks for growth support competition and deliver better outcomes for consumers.”
It came after Pets at Home revealed revenue growth was fuelled by its vet business last year, with revenues in that division up 17pc compared to 4pc growth in its pet stores.
09:16 AM BSTSterling at strongest level against the euro since August 2022
The pound has risen to its strongest level against the euro in almost two years amid expectations that the European Central Bank will start lowering interest rates as soon as next month.
Sterling was up as much as 0.2pc against the euro on Wednesday morning, hitting its highest level since August 2022.
It follows signs that the ECB will deliver at least interest rate cuts by December, with the first expected as soon as next month.
The Bank of England is expected to trial the ECB for cuts, with markets only pricing in one quarter-point reduction this year.
09:09 AM BSTLondon a ‘less attractive’ market than others, Oaknorth chief says
London is looking “less attractive” than other markets, the boss of fintech Oaknorth has said, becoming the latest chief to criticise the Square Mile.
Speaking to CityAM, Oaknorth co-founder Rishi Khosla said the UK had “not done the best in branding over the last two, three, four years”. “Actually, really since the Brexit referendum vote.”
He said Oaknorth had not made any decision on when it would list or where it would like, but said the UK was “less attractive on a relative basis” than other markets.
It comes amid growing concerns over the financial health of London’s markets.
Paddy Power owner Flutter, plumbing giant Ferguson, cement-maker CRH and tour operator Tui are among the major companies to have recently turned their backs on the City.
08:47 AM BSTLabour Party welcomes Royal Mail assurances
The Labour Party has been responding to the news that Royal Mail has accepted a takeover bid from Mr Kretinsky, saying assurances made by his EP Group are a positive.
In a statement, the party said: “These assurances are welcome that Royal Mail will retain its British identity and safeguard its workforce with no compulsory redundancies. Labour in government will ensure these are adhered to.”
08:26 AM BSTBritish drivers being charged highest diesel prices in Europe, says RAC
Drivers are being forced to pay more for diesel in the UK than anywhere else in Europe, according to new analysis.
A litre of diesel is selling for an average of 155p at UK forecourts, which is more than 5p more than in Ireland and Belgium, the RAC research found.
In Italy, diesel is selling for around 7p less per litre than in the UK.
It comes despite the Government moving to bring down prices at the pump in 2022, cutting fuel duty by 5p per litre.
RAC fuel spokesman Simon Williams said: “The average price of a litre of diesel should really be down to around the 145p level if retailers were charging fairer prices.
“The margin on petrol is also, in our view, unreasonably high at 13p. We can see no good reason why retailers in Britain aren’t cutting their prices at the pumps.”
The UK competition watchdog has been investigating the fuel market, finding last year that there was evidence of profiteering. In March, the Competition & Markets Authority said it was concerned about the increases in petrol station profit margins.
diesel08:13 AM BSTBHP pushes for extension to Anglo bid deadline
BHP has called for further extension to a bid deadline to allow for more talks over a takeover of rival Anglo American.
BHP said the deadline should be pushed back from later today, coming after three of its takeover offers were rejected.
Anglo previously claimed the offers were too risky and complex. The latest bid valued it at £38.6bn. It came after BHP had put forward two prior bids, valuing Anglo at £31.1bn and £34bn respectively.
BHP on Wednesday said: “BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination.”
07:54 AM BSTWorkers have ‘lost all faith’ in Royal Mail management
Union bosses are poised to demand a ‘complete reset in employee and industrial relations’ when they meet with EP Group over the takeover next week.
Communication Workers Union general secretary Dave Ward said: “We do welcome some of the commitments that have been made but the reality is postal workers across the UK have lost all faith in the senior management of Royal Mail and the service has been deliberately run down.“We will meet with EP Group next week and call for a complete reset in employee and industrial relations, the restoration of postal services and further commitments on the future of the company.“We will also be directly engaging with the Labour Party and other stakeholders to call for a new model of ownership for Royal Mail where our members and customers have a direct say in key decisions and the creation of a golden share which will protect a key part of the UK’s communications infrastructure.”
07:45 AM BSTWho is IDS buyer Daniel Kretinsky?Daniel Kretinsky – David W Cerny/Reuters
Despite an estimated $7.2bn (£5.8bn) fortune, Daniel Kretinsky is notoriously private. The billionaire’s reluctance to talk about his investments – or much else – has earned him the nickname the Czech sphinx.
Born in Brno, a big city southeast of Prague, his father was a professor and his mother a judge at the Constitutional Court of the Czech Republic.
Mr Kretinsky trained as a lawyer before turning to finance, making his name as a young dealmaker at industrial investor J&T Group.
He eventually struck out alone and grew his business, EP Group, by snapping up unfashionable fossil fuel assets from companies looking to retreat from oil and gas.
This strategy paid off handsomely after Russia’s invasion of Ukraine, as EP’s collection of power plants, gas pipelines and other infrastructure became more critical than ever to keeping the lights on.
More recently Mr Kretinsky has branched out into everything from newspapers, football clubs and groceries.
He is the co-owner of Sparta Prague football club and owns a stake in West Ham United.
07:38 AM BSTOwning Royal Mail will come with ‘enormous responsibility’, Kretinsky says
Daniel Kretinsky has said IDS ‘must accelerate its transformation and investments into modernisation” after the board recommended his takeover offer.
Mr Kretinsky said: “IDS, and Royal Mail in particular, form part of the national infrastructure of the countries they operate in. More than that, Royal Mail is part of the fabric of UK society and has been for hundreds of years.
“The EP group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day.
“The scale of the commitments we are offering to the company and the UK Government reflect how seriously we take this responsibility, to the benefit of IDS’ employees, union representatives and all other stakeholders.”
07:31 AM BSTGood morning
The board of Royal Mail owner International Distribution Services said it has agreed to a £3.57bn takeover offer from Czech billionaire Daniel Kretinsky.
Under the deal, Mr Kretinsky has agreed for Royal Mail to deliver first-class post six days a week for the next five years.
5 things to start your day
1) Labour’s business letter ridiculed after executives refused to sign | Lack of big-hitting names should be ‘a big concern’ for the party, critics warn
2) Ocado set to be axed from FTSE 100 | Pressure to list in New York grows as tech company faces relegation from blue-chip index
3) Shell plots job cuts in offshore wind division | The oil giant is continuing to shift from green energy
4) US immigration surge risks keeping interest rates high for months | Top Fed official ‘concerned’ about housing market pressures amid battle to tame inflation
5) How Google’s malfunctioning AI risks ruining the internet | In changing the way its search engine works, the tech giant threatens to become its own undoing
What happened overnight
On Wall Street, the Nasdaq managed to rise past the symbolic 17,000 barrier, and close above it for the first time as AI leader Nvidia hit a record high.
The Dow Jones Industrial Average fell 0.55pc, to 38,852.86, the S&P 500 gained 0.02pc, closing at 5,306.04, and the Nasdaq Composite gained 0.59pc, to 17,019.88.
The yield on benchmark 10-year US Treasury bonds rose to 4.54pc, from 4.473pc late on Friday.
Hong Kong shares fell at the beginning of Wednesday on concerns about the likelihood the Federal Reserve will cut interest rates at all this year.
The Hang Seng Index sank 0.86pc to 18,659.41, the Shanghai Composite Index dipped 0.05pc to 3,108.03, while the Shenzhen Composite Index on China’s second exchange eased 0.12pc to 1,726.93.
Tokyo stocks opened flat on Wednesday after shares on Wall Street ended mixed.
The benchmark Nikkei 225 index was up 0.03pc at 38,867.89 in early trade, while the broader Topix index was down 0.05pc at 2,767.17.
How are the major market averages (^DJI, ^IXIC, ^GSPC) feeling this morning after the Nasdaq’s big climb above 17,000 on Tuesday? Yahoo Finance’s The Morning Brief is here to help investors start their trading day off right as hosts Seana Smith and Brad Smith walk you through the top stories and market trends.
Hess Corp. (HES) shareholders approved the $53 billion buyout deal with Chevron (CVX). In other energy M&A news, ConocoPhillips (COP) is set to acquire Marathon Oil (MRO) in an all-stock deal valued at $17.1 billion. Tortoise Portfolio Manager Rob Thummel told Yahoo Finance that this deal came as a total “surprise.” Lastly, platinum miner Anglo American (NGLOY, AAL.L) rejected BHP Group’s (BHP) bid to extend their merger deadline.
Russell Investments President and Chief Investment Officer Kate El-Hillow sits down with the team in-studio to discuss the market’s momentum trade and the strength of this earnings season’s fundamentals.
This post was written by Luke Carberry Mogan.
Video Transcript
It’s 9 a.m. here in New York City.
I’m Brad Smith alongside Shana Smith and this is Yahoo Finance’s flagship show the Morning Brief Stock Futures right now.
They are in the red after the tech heavy NASDAQ, it closed above 17,000 for the first time here.
And ultimately, uh well, yeah, 35,000 is what we’re seeing here right now.
And ultimately dow Futures are singing the over 250 points with Wall Street poised to open lower this morning.
Treasury yields, pushing higher traders betting that the fed might actually not cut rates until November sticky inflation.
Will that is to blame the FS preferred inflation gauge PC is due out later this week and that will give investors a little bit more insight into the feds path forward.
Let’s get right to the three things that you need to know this Wednesday morning, your road map for the trading day YJ and for a and pro Superman and have more stock futures are falling after the NASDAQ closed above 17,000 for the first time.
Investors focus is shifting to a key inflation data later this week as expectations for the timing of rate cuts continue to see.
Saw with policymakers wary over sticky inflation.
We have to see if Friday’s PC print can help stops regain some momentum.
Plus investors are watching two major deals playing out in the energy space has shareholders voted to approve the $53 billion buy out by Chevron and Conical Phillips is acquiring marathon oil in an all stock deal valued at $17.1 billion.
Meanwhile oil prices are pushing higher and uh shares.
American Airlines under pressure while dragging down the airline sector this morning, American slashes Q two revenue, all the company navigates increased competition in the domestic market and a more cautious consumer.
The airline also announced it was parting ways with its chief commercial Officer.
Well, good morning, everyone.
Our top story this morning, futures pulling back this morning, the NASDAQ closing yet above another record high in Tuesday’s session, Wall Street tracking a rising treasury yields as investors keep their eyes on inflation concerns.
Dow futures.
They’re off more than 200 points in the S and P 500.
Also sliding here this morning.
We’re keeping a close tab, close eye on some of those futures activity.
As we mentioned the dow right now down by about 7/10 of a percent.
Yeah, the dow uh trading lower here, NASDAQ 100 also on track to to open the day in the red as well as the S and P got the S and P sliding below 5300, a few uh key levels here to watch.
But we also got to talk about some of the big deals that are taking place right now and some of the broader picture that’s going on and starting it off with some of the movement that we’re seeing within the energy space.
When you take a look at Chevron, a little bit of a move lower here and just by a fraction though off, just to the downside here, this coming after has shareholders actually approving Chevron’s deal to buy out the company.
Of course, this is a step forward.
But the question here is what exactly is going to happen to he guy on a stake and we know Exxon has very much been putting on the pressure and could have some plans here that could potentially cause the deal to implode.
So of course, that will be the focus here.
And then beyond that, you also got some news out of Conocophillips this morning, that’s moving lower by about 1% a deal here for marathon petroleum.
So again, some more consolidation within the energy space and that of course, could have uh I guess more ripple effects beyond just some of these bigger names and talk about further consolidation within energy.
Yeah, absolutely.
We’re also keeping a close tab on airlines here this morning as we’re taking a look at some of the, as we were toggling on over to these airlines, one of the huge things.
There we go.
Of course, they’re bound to be there.
Notably here, American Airlines, one of those major companies that we’re keeping tabs on here.
You’re seeing those shares down by about nine, nine and a quarter percent here pre market this after the Chief Commercial Officer is stepping down that person leaving the role.
And then additionally, you’ve got uh, more of a warnings for, uh, forecast for the, um, the forecast warning here that has come out from the company here.
So, uh, a lot of that being factored in at the same time, you’ve got some other movement in the space as well.
United catching a little bit of a bid upgrade there.
So we’ll continue to keep tabs on the airline space.
We’ll dive further out into that on today’s show.
But getting back to those two major deals in the energy space has shareholders officially voting in favor of the $53 billion deal to sell the company to Chevron.
And Koco Phillips has agreed to acquire marathon oil in a $17.1 billion all stock deal.
Yahoo finances and Es Farre has the breakdown on the sector.
Hey Innes.
Hey Brad.
Yes.
So first let’s start out with the shareholders which voted to approve the buy out by Chevron that was highly anticipated.
There are still a couple of steps though to this deal, in order for this deal to officially close.
First of all, the FTC regulatory approval has to go through and Chevron is expecting that to go through.
They have put out a statement.
Yes, there spoke spokesperson saying that they’re anticipating that FTC regulatory process to move through in conclusion in the coming weeks.
They also are anticipating that their preemption rights will be affirmed in arbitration.
This has to do with Exxonmobil, which Exxonmobil has taken these companies into arbitration because Exxonmobil is saying that they have the right of first refusal to that stake in Guyana, the very valuable crown jewel that hess has the reason.
The big main reason as to why Chevron wants to acquire Hess because of that stake in Guyana and that would be something that is in the coming months going to be happening with this arbitration.
And Chevron saying that they’re looking forward to completing the transaction and welcoming Hess to their company.
Still, the arbitration is pending here.
As far as the second deal is concerned, this is marathon oil and Conocophillips.
Conocophillips would be acquiring Marathon oil for $17.1 billion in an all stock deal a bit more than that.
If you include debt, this would also broaden Conic’s footprint domestically in the Texas region, in the North Dakota region.
Now, city analysts came out with their take on this.
They’re saying that this has been is not based so much on inventory and growth the way we’ve seen with this other consolidation that has taken on in this space with these bigger players, but this looks more about optimization and also lowering costs.
I spoke to other analyst this morning saying that this deal would be unlikely to face anti trust issues concerns because these companies together would still be smaller than the big major oil companies that we’ve been talking about in recent months.
They’re both considered independent oil companies and without downstream assets without refining distribution and retail guys.
All right, Anne, thanks so much for breaking that down for us.
We want to continue this conversation because oil deals and mergers that are in focus today.
This coming after has shareholders approving an all stock merger with Chevron Conocophillips agreeing to acquire Marathon oil deal making it the sector that rose in 2023 hitting the highest level in over a decade according to the US Energy Information Administration to break this all down.
Talk about some of the acquisitions that are taking place within this space.
We wanna bring in Rob Thumble.
He is the Tortoise Portfolio manager and managing director, Rob.
It’s great to see you here.
So let’s talk.
Let’s start with the Chevron and hes uh shareholder vote there from hes shareholders approving this deal to sold to Chevron.
Of course, this clears what is a major hurdle but other hurdles remain when you talk about Exxon’s involvement here, how exactly that could play out also FTC uh approval whether or not a deal is going to be approved.
So I guess how do you see what happens next?
And how likely is it?
Do you think that that Chevron is going to acquire house?
Yeah, that’s a good question.
So the next step is the FTC approval II I think you just saw ultimately the uh Exxon pioneer deal got, got through the FFTC process.
So you’d probably expect that the, that the Chevron S deal could, could obviously jump back over that hurdle.
But the biggest hurdle is as, and as, and you have been talking about which is, is the, the, what’s it gonna be the, the arbitration and the arbitration and the result of the arbitration drives everything.
If, if the, the arbiter rules uh that ex and CNN are entitled to, to a right of first refusal, then this deal will be, will be off because uh a a as everybody’s highlighted the crown jewel asset of this transaction is the guy on an asset.
And so, um now what’s the probability that’s really difficult to really handicap?
And, and the reason is this is nobody has read the joint operating agreement except for uh lawyers um at, at Exxon, at Co, at Hess and obviously probably a Chevron.
And so everybody, they have their interpretation.
I, I think ultimately though it’s probably good to have Chevron as a partner, I think Exxon would recognize that um as well as co um and, and so, II, I do think that the transaction can happen.
Um But, but it’s really predicated on, you know, probably a handful of words in this kind of super secret joint operating agreement that nobody’s been able to get their hands on.
So, without the Guyana assets, what is the evaluation of this, this price tag for the deal?
Well, well, it goes down a lot.
I mean, I mean, I, you know, I think, you know, he is up probably 20% since the, since the transaction was announced.
Um maybe even a little bit more than that, what I would say is, uh it’s not as if Guyana, Guyana is still worth uh uh a decent amount and, and, and that’s, that’s really the valuation is what’s the valuation?
And that, that’s really part of the arbitration is what is the value that Chevron is placing on Hess and, and does Exxon want to, and, and see want to pursue and pay that, that, that type of value?
But, but that takeover premium would come down.
Uh the he share price would come down if the transaction or if the arbitrator would rule in, in favor of Exxon um in, in this case sometime and, and we expect that sometime probably early next year.
I think the question is if, if Chevron is not able to acquire uh Guyana assets, does this deal then fall apart?
Would Chevron have any interest in Hes outside of the assets in Guyana?
I think the answer that’s no, I, I think Mike, we ceo of Chevron has made it very, very clear that without the Guyana asset, he he if the company is not interested in pursuing a uh uh the the acquisition and the merger with uh on without the guy on asset now, obviously, things can change.
But, but, but ultimately, uh the, the the guy on asset is the, is the critical asset uh for this transaction to occur.
So without it, I don’t think the transaction, uh All right, another transaction we’re tracking here this morning, Anglo American officially rejecting bhps request to extend the deadline for talks on its $49 billion takeover offer here.
I mean, just wanna get your reaction on this rejection here and what the signal is next.
Yeah, I’m not as familiar with that transaction but, but I can tell you there’s a lot of transactions going in the mineral space, in the, in the oil and gas space.
Uh and, and, and obviously valuation, I it is always probably the biggest hurdle when it, when it comes to a lot of these transactions.
So, so that’s probably the biggest driver of, of, of what, what’s causing this the uh potential disruption of this transaction.
All right, let’s talk about Conocophillips because that’s the other big deal that we’re talking about within the space.
Conocophillips and uh marathon petroleum, the merger there.
Talk to me just about one, what this is going to do to Conocophillips business here and then two, just what this tells us just about further consolidation, kind of go on what you were just talking about there before, but further consolidation within this space and the likelihood that this might remain a theme here for at least the quarters to come.
Yeah.
So this is a bit of a surprise and uh and I would say the reason and what I mean by that is I don’t think anybody probably had marathon oil being acquired by Conocophillips.
Um And, but, but when you look at it, uh it does make some sense.
So if you look at the marathon oil assets, they’re good, they’re not great.
But the management has really done a great job of the capital discipline and what that’s resulted in a is in a really high free cash flow yield for marathon oil.
So marathon oil actually has one of the highest free cash flow yields in the oil and gas space.
Um So that’s a bit attractive or that is attractive to somebody.
And, and obviously Conco Phillis is, is, has found it the most attractive at this point.
So when you merge these assets together, what, what Conocophillips gets is some good assets in, in uh you know, across the Bakken in North Dakota, across the Permian and the Eagle Ford in, in, in Texas.
But it gets a lot of free cash flow that it, that then uh can redeploy.
And I think what, what kind of go has done at Ryan Lance and the management have done, they’ve been really, really good at allocating capital.
And so now they’re just getting more cash to allocate whether that’s to shareholders or, or to future acquisitions.
Um, they, they’ve done a really, really good job of allocating capital and this just gives them more capital to allocate in the future.
Is this likely to, uh receive much regulatory scrutiny?
Do you think?
I think these all, all, all of these do, right.
But I, but I do think obviously less, it’ll, it’s a less uh less notoriety than a pioneer transaction or even a transaction.
But yes, it will go through the same process and uh and, and I, and I’m sure we’ll, we’ll go through the same uh rigor that all of these transactions have gone through at the FTC.
Really over the last three or four years, Rob Del Torres portfolio manager and managing director.
Thanks so much for taking the time here this morning, Rob.
Appreciate it.
Thank you.
Well, let’s go to the skies here.
American airline shares.
They are sinking this morning after cutting its sales outlook for the second quarter.
The airline also announcing its chief commercial officer will leave his role next month.
Yahoo Finance.
This pro superman has some of the details on this one for us stock sinking this morning.
Almost 10%.
Ross.
Yeah, yeah, you know the getting hit there and that revised outlook also seeing adjusted EPS for Q two in the one to dollar 15 range that was down for a dollar 45.
So big cut there for the current quarter.
Uh, the original points to some trouble here with summer travel when most airlines are sort of doing well.
Uh, now there are some issues that all airlines are dealing with.
Right.
Uh, Middle East tensions.
Consumers looking for more discounts than revenge traveler is sort of going away this, this summer.
But they still want to travel a little bit but they don’t want to spend uh exorbitant fees for it.
Uh And, but the American sort of revision revisions here with, with, with both profit and revenue, they seem worse than expected.
Plus he mentioned the chief commercial officer Vasu Raja leaving seems he made some bets on things like reducing long haul routes L A to New York which are really lucrative.
He started focusing more on the Sun Belt, which I think is good business but it’s not as lucrative as these bigger longer flights.
And the company needs some more general revenue.
They need more revenue.
It’s not, it’s not meeting expectations here for right now.
And it’s concerns why is this happening to American?
Is it just an American problem?
Yeah, and that is the question, is this an American problem or are we starting to see some of this weakness elsewhere?
When you take a look at some of the other larger domestic players we had, we had uh players like Ryanair talk about, uh, uh, consumers a bit more cautious but Delta, uh, United, they’re not warning about revenue.
They’re doing actually pretty, quite well these days.
I mean, I know Brad, you’re pretty close to Delta, you’ve heard the same as well.
So, I think it’s potentially an American issue.
Um, current CEO is known as a good operator, but they might need, uh, more of a sales stick to come in there and really kind of pump up uh sort of getting after that business consumer uh reestablished some of those longer haul flight routes which just take time and, and uh and from what I understand, they, they sort of diminished the New York to L A business, which was, which is a big business, but then also hard to build back up as you have.
Other, obviously Delta United are big there too.
So that’s sort of highlights some of the challenges Americans face right now.
Uh What’s one of the more prem airlines in the world?
Yeah, I mean, look when you think about the broader airline space here too, the, the larger thing for the summer travel is where companies have started to talk about where demand should be holding steady even as we’re kind of going towards this, this cruising altitude of normalization if you will versus what are some of the problems specific as you were laying it out to American Air versus some of the other airlines out there?
We still don’t know what the ultra low cost carriers are gonna have to navigate during this interim period of time as well.
But at least for this period, it seems like united, even as they had presented or at least given some of the updates going into the busy spring break and then summer travel season, they were seeing demand hold steady right now too.
So we’ll continue to track all of these.
But right now the American airline taking it on the Chin and a lot of the other major airlines down here as well.
In extended hours.
We’ll see where things open up process.
Thanks so much.
Well, we are just getting started here on the morning.
Retail round up Dick Sporting Goods are Ring after boosting his full year guidance and a Crombie shares, but they’re also in the green this morning after posting its strongest first quarter ever, we will speak with an analyst from U BS later on plus two shares are surging up just about a five for actually 12% for two in the back of its earnings report.
State t for a conversation with the company CEO that’s coming up on catalyst.
Next hour, all this and more.
You’re watching.
Yah Anglo American officially rejecting BHPS request to extend the deadline for talks on its $49 billion takeover offer.
The deal deadline will remain at 5 p.m. London time today.
You’re taking a look at the stock reaction here.
Uh pre market we’re seeing BHP group here flat just barely to the downside, Anglo American down by about 1.9% amid a wave of consolidation that we’ve seen in the broader energy sector and specifically oil and gas landscape right now, looking at Anglo American under just a bit of pressure off nearly 2% in pre market.
Now, this comes after like you were just saying they rejected the bhp’s request here for more time.
So what happens next?
So BHP has until 5 p.m. London time today to commit to an offer offer or walk away for six months.
And R BC analyst, uh Marina Collera was out with a quick reaction here noting the Anglo was already below the implied value of BH BS latest offer.
So she sees further pressure as the probability of an acquisition is repriced in terms of what could happen next.
Talk about a possible hostile takeover.
She’s saying that BHP is unlikely to go hostile given the complexity of this deal.
So again, you’re looking at BHP here in pre market up just over 1% on the flip side, you’ve got Anglo American those shares off nearly 2%.
But again BHP has until 5 p.m. London time today to commit to an offer or walk away for six months, right?
And just to further clarify, I should have said commodities landscape consolidation that we’ve seen because this is really more on the multinational mining elements of uh some of the commodities that of, of course are as Anglo American would say in their tag line, improving people’s lives.
So, uh ultimately, at the end of the day, this would kind of consolidate things like diamonds, platinum, copper, iron ore and so forth in some of the mining efforts there.
All right, let’s move on to the retail space.
A couple of big movers out today.
Let’s first start with Dick’s sporting goods jumping after raising its full year earnings guidance, the retailer seeing comp sales climbing over 5% in the first quarter up from a year ago, driven by heightened transactions.
So an increase in transactions, meaning more people are spending buying goods at the store to put it in plain English for everyone.
And again, you’re looking at the pre market trade up nearly 10%.
So why are they seeing this?
Right?
And we talked about some of the changes that have taken place under Ceo Lauren Hobart.
She has been expanding this new retail concept.
She’s renovating current stores.
She’s re relocating some stores as called the House of Sport location.
So it’s more of an experience.
These include batting cages, golf club repairs, management plans to boost spending on both e commerce and a physical location.
So those turnaround efforts, it looks like at least uh helping the stock, at least helping the business for now.
The retailer now expects the com sales are going to be up between two and 3% for the full year with EPS uh within a range of 3 30 1335 to 1375.
And again, you’re looking at a pop here ahead of the open.
Yeah, it’s really interesting here.
I mean, especially looking at the raise in the outlook, you just mentioned some of the specifics on there, but the demand profile that they’re seeing among consumers right now and that’s really pointing back to the products that they’re being able to bring into store here, product pipeline from some of their key brand partners in the vertical brand portfolio, they say has never been better.
So that points back to both the equipment and potentially on the apparel side uh where they’re seeing, for example, as they provide Nike’s recent Paris Innovation Summit highlighting breakthrough products across apparel and footwear that they look forward to bringing to their athletes.
Dick saying that in this release here and talking about some significant momentum that they’re forecasting about a differentiated product and compelling experience that they’re providing.
I just remember running around the track when I used to go into Dick’s sporting goods growing up, testing out out the shoes.
I mean, you gotta put it to the test and you just go for a quick sprint.
That’s the way to do it.
Let’s switch gears here and talk about Robin Hood that so is also turning check on Yahoo Finance this morning, announced a plan to repurchase as much as a billion dollars of its own shares over 2 to 3 year period.
Now, this buyback program is expected to begin in the third quarter.
This is significant because it’s the first uh stock buyback program announced by Robin Hood.
They’ve been rolling out a series of new features trying to cater to that new demand here for products.
So they’re looking to grow really beyond that start up phase, uh which is still pretty much referenced as, but this buyback really under how Robin Hood, I think is adopting a similar approach to kind of win over investors of those as other companies who are, who are a bit more mature, who have been around for a lot more time, obviously.
So they’re saying this as they’re very confident within the business, they’re looking to grow, they’re looking to reinvest, they’re looking to come up with new products.
And again, you’re looking at extended gains of nearly 1% here ahead of the open wave of buyback programs that we’ve seen first of their kind over the course of this earnings season here.
I think back to even as we were speaking with uh Kaufman from Fiver and their CEO yesterday, you’ve got fresh buybacks there.
You got a fresh buyback here on Robin Hood.
And so a lot of focus on, at least for the mindset of the investor that CEO S are trying to send and signal about the confidence of their business.
That’s typically where you see more of these announcements coming forward, especially if you see uh over an extended period of time, a lot of chop or volatility in shares and, and Robin Hood had seen that for a while coming into the start of this year.
But over the past year, take a look at that share price reaction here.
It’s up by about 100 32% fast past 52 weeks.
Uh But notably, I would be interested to see current quarter, uh, what they say after this quarter about what they’re seeing or saw within the broader kind of meme stock frenzy that once again reinitiated, I think that’s gonna be interesting to hear once they finally do report earnings again, but we’re gonna have to wait for that.
All right.
Well, you don’t have to wait for the opening bell on Wall Street.
That’s just around 3.5 minutes away.
So, keep right here on Yahoo financing.
You got much more of the early action ahead.
We’ll be right back.
All right, we’re taking a live look at the opening bells happening at the NASDAQ and the NYSC.
Hey, it looks like, uh, you’ve got the great folks at perspective ringing the opening bell at the NYSC.
Oh, and the winner of the Indie 500?
Joseph New Garden there, front and center ringing the opening bell at the NASDAQ.
You know, I went to Indianapolis for the first time this year and a lot of people are very happy about the Indy 500 there.
No surprise at all brings a lot of, yeah, it brings a lot of uh, a lot of cheddar to the um, local economy.
A lot of De Niro.
Yeah, money anyway.
No, I can’t say I am but I like cars.
So leave it there, checking out where things are opening here this morning.
We got the dow under a bit of pressure.
You got the S and P uh pulling back just a bit.
You can see falling there below 5300 on track to pull back there.
And the NASDAQ Composite closing at a record high closing about 17,000 this morning.
Uh giving back some of those late day gains and checking out some of the sector action, what we are seeing here this morning as we pull that up here, a bit of a mixed picture.
We talked a lot about, we have energy up on our screen because of some of the deals that are taking place here this morning ahead of the Open.
But again, you are seeing a lot of red, you have energy among the out performers.
I guess the best of the worst of the group here when it comes to the fact that we’re still looking at losses of about a half of a percent that along with communication services on the flip side though, if you got utilities under a pretty decent amount of pressure off just about 1% and real estate, a bit of a reversal here today from what we saw early in yesterday’s trading action that’s opening up just off, about 1%.
Jared By with a closer look at some of that movement that we’re seeing.
Jared.
Yes, it is off to the races for the NASDAQ.
So a very fitting opening bell there.
And by the way, I like cars too.
So I just wanted to show what the difference between the NASDAQ and the Dow mainly and also the S and P 500.
This is year to date.
And you can see we have accelerated to the upside right here.
But if we take a look at the dow, well, we just kind of exceeded these highs that we had in April.
Let’s see if I can draw on this.
There we go.
We got a little bit of a punch above, but then we dropped off pretty steeply and we’ve had some bigger losses.
We’ll take a look at that in a second.
Here is the S and P 500.
It is maintaining the highs and it is not broken through that big red candle that you can see there.
That was a bad day in the indices last week.
Uh We can also take a look at the transports pretty weak there and also the small caps.
Here’s the Russell 2000.
But I want to show you what’s happened with the bond market because I think this is really instructive and it’s counter intuitive what’s happening with the sector action.
So this is a year to date chart with the 10 year T note yield.
And over the last 10 sessions or so, we have screamed to the upside.
Now, we’re at the highest level since early May.
And in that time, I’m going to show you what has happened over the last seven days in the sectors.
Now we have tech and communication services.
Those are the only out performers.
Usually when you see going higher, you don’t see uh tech outperforming.
But that’s nevertheless, what is going on here.
And then you can see a lot of dark red real estate down 5% financials down four health care and energy down more than 3% and just peering inside the NASDAQ over the last seven days, you can see NVIDIA now up over 20% since its earnings release last week.
Um But I think uh we what we have here when the rest of the market is kind of fallen off a little bit.
You have this Invidia safety trade going on and maybe that’s what’s been holding up the market because if we take a look at the semi conductors over the last seven days, that is one of the few bright spots and there you have it again, NVIDIA leading the way.
So I’m going to take a brief look at what’s happening today and yes, all 11 sectors in the red here led to the downside by real estate and health care, but I’m going to be watching the Tenure Tino Yield and basically the US bond market for clues as to what might happen next in equities.
All right, Jared, thanks so much.
Let’s talk about the NASDAQ right now because it’s hitting its 12th or hit its 12th record close of the year.
A I really fueling the rally.
One of the biggest names in the story has been NVIDIA.
It’s contributed over 46% of the major averages returns a year to date according to Yahoo finance calculations.
Our next guest thinking that there might be some more room to run in the tech trade here to break it all down.
We wanna bring in Kate Hill Russell Investments, president and Chief investment Officer is here, Kate.
It’s great to have you.
So let’s talk about the ru the massive run up that we’ve seen in some of these tech names.
You talk about a lot of the fact that it’s been driven by only a handful of these larger cap tech plays.
What does that then tell us?
Do you think just about that momentum that we could see in the second half of the year, we still going to see some of this buying activity of these larger cap names?
Yeah.
Well, it’s always hard to call the end of a momentum trade, particularly when it’s supported by some good fundamentals.
And so you know, you’re hitting kind of a new high yesterday.
Yeah, I’d say, like, you know, continuing to add to that right now at these levels, you know, probably if you’re already a holder, you know, wouldn’t do, you know, as much.
But, you know, if you are, you know, you know, in it and, you know, trimming a little bit might make sense, particularly if you think that the A I, uh, trend or theme is a durable one.
And we do, and so you start to see some broadening out into other sectors.
And we’re seeing some of that, whether it’s in utilities, maybe that what we are seeing is the market opens, you know, today or some of the sectors that might be able to benefit from some of the A I productivity gains consumer and health care will probably be some of the first, you know, sectors to be able to see the benefit of it.
So we do see this, you know, still being a well supported trend that could continue.
Um you know, in the second half of the year, if we continue to see in future earnings periods, earnings growth as uh as we’re continuing to track up against whether or not we really do see a recession and a concerted consumer pull back here and no rate cuts then does no rate cuts matter to the markets.
Yeah.
Um I think a slow cut kind of scenario that might start at the back half of the year should be really good for risk assets, you know, cuts that are driven by obviously a recession, you know, have a very different impact.
But if you’re still seeing some, some strong growth and inflation starts to taper a bit and we’ll see what happens with core PC.
You know, at the end of the week is a signal, you’re having some cuts at the end of the year will be helpful but not necessary if you’re continuing to see some of the growth in earnings, even if it slows down a bit helpful.
To what extent, I mean, if, if we do see cuts, what does that then mean for future gains versus if we don’t see cuts?
Yeah, I mean, if you don’t see cuts but you don’t start to have some of this, you know, hawkish tone in terms of hikes.
I think you’re still focused more on the fundamentals and earnings and how companies are doing.
I think certainly more of an edge case if you start to see a concern about inflation coming up and the discussion on hikes coming back in that has a very impact on the market but no cuts at all with growth.
I don’t think it will have a big impact as people focus on the earnings and where we’re seeing the growth coming from, even if we did see some profit taking at these levels.
We were just talking about at the start of this segment some new record highs for the NASDAQ composite, if we did see rotation, where would that kind of flow into from your perspective?
Yeah, so, so I think it ends up being in, you know, consumers in health care, maybe absent some of the political considerations that will happen towards the back half of the year European financials, you know, is another area if you kind of shift out kind of globally where there might be some shifts.
But I think European financial is attractive right now.
Yeah, I mean, I think it’s just like the, the set up and you obviously have some challenges in in Europe from, you know, you know, maybe not as healthy as, as the US is and some cuts that could end up coming through.
But just from evaluation perspective, they could be in a, in a better position.
And I think there’s some, you know, cyclical kind of rotation that you could see there when you talk about the uh gap between the out performers and the underperformers is that set to widen.
If we don’t see the, if we don’t see the fed cut rates this year, I think if you have like higher for longer, it’s gonna start to hurt companies that handle this period.
Well, thinking that there was gonna be some relief coming and if you don’t see that both some of the higher leverage companies, small cap companies, but then even some of the consumers particularly low and middle income, it’s gonna start to pinch and I think that could, you know, start to hurt some of and widen the gap further when we talk about, uh, the performance that we will likely see here going forward.
And I guess what is going to be that massive driving factor we have earning season pretty much behind us now, is it, is it mostly going to be the fed that’s driving this intraday action and some of this volatility that we’ll see, at least in the short term, the shift to macro, you know, post earning season is definitely there.
Now, buybacks and other things now that that window is open may help support the market a bit, but it’s shifted back to to macro particularly as you start to have some of the, you know, the fed speakers, you know, coming in with a bit more of that hawkish to like people are, you know, focused on what’s going to happen.
Are we going to see these rate cuts?
Are we going to see this slowing kind of in the labor market that doesn’t, you know, it’s still a healthy labor market and healthy consumer.
But the back half of this year, if you start to see some slowing, I think that’s going to become a big part of the focus over the near term.
You mentioned the general election.
At what point do markets really start to pay attention to what’s being campaigned on?
What economic policies candidates are discussing.
Yeah, not until the, um, not until kind of the back half of the summer when you start to get the conventions and, and closer to the election, you know, at the end of the day and this won’t be a new thing like elections, you know, generally don’t move, you know, the, the market, you know, much in investors, you need to be focused on the policy shift, as you said and kind of which the administration and you know, whether the House and the Senate you stay aligned you or not.
But you know, right now we’ve got a lot more time.
It’s before it starts driving markets, Kate L Hillo, who is the Russell Investments, president and chief investment officer.
Thanks so much for joining us in studio.
Thanks so much.
Coming up everyone.
We’ve got a fresh pulse on the consumer and we’ve got a deep dive into Abercrombie and Fitch’s quarterly results.
On the other side of the break update, the stores don’t smell anymore.
They say at least that’s what our executive producers do.
Good vibes this morning for Apple Bank of America reiterated the company as the top pick, maintaining a buy rating and a price target of $230 on the stock B of A analysts are optimistic about the adoption of A I enabled phones.
They’re coming.
Dan Dan Yahoo Finance’s Dan Halley here to tell me whether or not these A I enabled phones are coming.
Are they, I think they call them in telephones.
Uh, that is, uh, yeah, in telephones you need to workshop that quotes.
Yeah.
Um, but I mean, look, this is something that Apple clearly has had to work on.
Uh, they don’t have any really generative A I capabilities right now that are doing anything.
Uh, they’ve been teasing this for some time.
Tim Cook has been teasing it, uh, on various, uh, earnings calls just because they’ve been left in the dust.
Microsoft has generative A I Google has generative A I meta uh Amazon, all of these companies are doing it.
Um uh some success, some floods here and there.
Uh but Apple has been the, the one kept out and so this is seen uh by a lot of analysts as potentially a kind of new driver for smartphone sales.
Now, do I feel that way?
Uh Not, not, well, I don’t, I, I, unless they show something at WW DC that’s like software driven that I think is gonna get people excited, then it’s not gonna do anything right?
People care about the camera, the screen and the battery.
Now beyond that, there’s gotta be some amazing software feature.
No one’s ever like, man.
Did you get that Siri update?
Have you ever heard anyone say that?
No, even when Siri came out, people were like, cool.
I’m sorry, I’m sorry.
Yeah, I just activated everybody’s phone.
Um But II I think if, if they can do something with the software that gets people actually excited, then it will be a driver.
Now, what does that look like?
I don’t know.
Right.
Because Samsung and Google already have generative A I capabilities on their own phones and it’s not really a reason for people to wanna buy them.
Right.
It’s more about the capabilities of the phones physically offer.
So I don’t necessarily know that this is going to be the driver that everybody hopes it’s going to be.
Uh unless it truly is something that Apple can say, look at how amazing this is compared to the rest of of what’s out there, this is going to get people to want to buy.
So Dan then how much is riding on the worldwide developers conference here next month?
Just in terms of if there’s any disappointment, what do you think the impact is or I guess what are analysts saying that the impact could potentially be here on Apple and the demand there for their phones at least in the near term?
Well, I think this is really uh a kind of setting up table stakes for like the future of of Apple and their software just because look, they’re already c is behind on this technology that’s changing things, right?
Microsoft showed with their uh their laptops that these are interesting technologies that can do a lot, right?
They have new features called things like recall uh that can kind of pull up anything you’ve been doing on your phone in the past, uh, you know, couple of years, uh, if you have the settings tweaked, right.
Uh, they’re, they’re doing cool, interesting things.
Um, Apple needs to offer that across everything, not just the iphone.
So if they don’t, if they disappoint, um, I don’t think it’s gonna get people to not buy an iphone.
Um, but I, I think it’s going to leave Wall Street and, and, and analysts saying, well, what gives is Apple, has Apple lost its edge?
And I think that’s more along the lines of what would happen is that the right way and going back to what you just said a minute ago, that Apple is very much viewed as maybe lagging when the comes to A I adoption in the A I race right now.
Is that the right way to view Apple at this point?
And I, I guess, is it a bit surprising just given the fact that you’ve covered the company for so long and it’s normally on the cutting edge when it comes to technological advances and adoption?
Yeah, I think, I think it’s a, I think when it comes to where they should be as far as at least having something uh to preview, right?
They’re, they’re behind, right?
But if you look at something like uh uh meta, they’re releasing these technologies as open source.
So it’s not really finding its way into too many products.
It’s more on the advertising side.
Um You know, Amazon, obviously, this is more about they have their uh Rufus uh A I assistant which is helpful but has its issues.
Um Google has launched Ja I it’s telling you to eat rocks, right?
So apple doesn’t want to do that, right.
That I think would be a bigger problem for apple and the perception of apple than it would be for, for something like Google.
Now, it’s a huge problem for Google because they’re supposed to be the source of trust online.
You don’t say let me Google this real quick because you don’t trust them, you do it because you do trust them.
So it’s a huge problem for Google.
Apple is all about fit and finish.
It’s all about delivering a product that people love and if they flo that, I think that would be a bigger problem than not having anything at all.
Nobody should be surprised that artificial intelligence is telling humans to eat rocks.
Yeah, I mean, look, eat rocks, eat paste.
It’s totally fine.
Uh And uh yeah, I mean, look, it’s not uh like you ever go to Google for anything important, you know.
So, well, we’re just going to leave it there.
Great with us here this morning for about 20 minutes into about 17 minutes into the trade.
You take a look at where things stand.
You’ve got the dow of nearly 400 points, a bit of a pullback here.
This morning, the S and P following further below 5300.
But the NASA take a look at that now off just around 7/10 of a first hand pulling back after, at another record high yesterday, above 17,000, we’re seeing a pull back just over 100 base points here this morning.
So again, some downward pressure across the board, we take a look at the sector action that’s reflected in the sector action to this morning.
All 11 of the S and P sectors here under a bit of pressure, real estate.
The worst performer of the group followed by financials and health care.
We’ll be right back.
Consumers still flocking to Abercrombie and Fitch name them shares.
Rallying on Wednesday after beating profit expectations and posting strong sales in the first quarter.
The company raising its full year sales outlook as demand across apparel and accessories continues to grow for a deeper dive into the results.
Yahoo Finance executive editor Brian Sozzi here with the breakdown.
Look, I I said name them but like I am one of them.
I made my my way in one of the stores like last week.
Yeah, this quarter, I just want to put this in context.
Um This is not going to be the norm from these retail earnings that are coming up.
We saw it when Walmart Report, we saw it from t reported a couple week ago, apparel is just soft and we saw it within Macy’s results.
So for Abercrombie again, to put up a, I would say mind blowing quarter is, uh, a very much an Abercrombie driven story.
So, what is this company doing?
Right.
It’s just getting its styles, right?
Uh, it’s keeping in its inventory under wraps.
This is a company that grew sales over 20% in the most recent quarter and its inventory was flat.
What is that telling you?
It’s that it’s just planning its business very well and it’s not overstocking items.
It’s putting new merchandise on the floor and the stuff is selling out.
Well, one area of the business that really caught me by surprise guys on the conference call moments ago was the wedding business is the business.
They recently launched Abercrombie and Fitch and it’s, uh, the Fran Hoitz CEO will talk to a little bit later on, uh, this afternoon saying it’s one of the hottest businesses they have right now can’t keep the stuff in stock and it’s not only that they’re coming in and buying wedding dresses, uh, from Abercrombie and Fitch or various wedding styles.
These are new customers in many cases to the Abercrombie brand and that is having that is sending customers to other areas of the store.
You know what?
That’s so interesting because it makes sense when you take a step back and think about it because it was really the millennial shopper who knew Abercrombie so well, decades ago, right?
And so now many of those people are in the age of, they’re getting married, they’re having weddings.
So why not buy at Abercrombie?
I didn’t even know I just pulled it up.
I pulled it up on my, on my computer right now.
I had no idea that they even had this business until you just said it.
But it makes sense because it also re the remaining committed to their loyal customers and they’re playing into that base that has worked well for them.
You see the film, you see the fitness.
Look, I saw, I saw the fit and I was upset because you were teasing this to us before.
And yeah, I didn’t see this coming at all.
They don’t have tuxes there though.
I was just there.
No tuxedos.
They’re not going to compete with the men’s warehouse.
But also interesting to uh Abercrombie noting on the conference call that they are now going to, I think now that their US business is solid.
Abercrombie’s working Hollister businesses finally start to turn they’re shifting their or shifting their sites to uh Europe, notably, uh Germany and the UK.
In fact, Fran Horowitz, uh saying she was just in the UK for and had their first annual board meeting there uh in, in quite some time.
So look for the company now to expand overseas a little more aggressively and thoughtfully and then also open up a good number of stores here in the US in the back half of the year we should clarify.
This is like wedding.
I’m still hung up on this wedding guest attire is what?
But they have stuff that you could wear for your wedding.
Walking down the aisle, rehearsal dinner, there’s a lot of stuff you could wear.
They get, yeah, get you geared up for your back.
I’m here to bring you this like a hashtag breaking news.
This one you can wear down the aisle, not me But yeah, if you wear head to toe, Abercrombie and Fitch, why not just live that wedding lifestyle and go out and buy one of these dresses you would, you, would you buy, would you get something from there?
Of course, why not?
I mean, it’s not bad.
Yeah, it’s not bad and it’s also a very affordable price point, especially when you compare it to some of the other.
I’m gonna put this to uh Ceo Fran Horace because I walk, walk by my latest, uh my recent my Abercrombie Fitch store, uh Roosevelt Mall and I didn’t see any of this stuff.
So I gotta ask her, what, where is this?
And why is not my store one?
Yes.
Yeah.
Maybe we should be buying more of these dresses.
I have no weddings to go to.
Nor am I getting married.
Not yet.
Nor do you need a dress any time any of that stuff on the wedding site.
But we’re gonna be asking Brian all of these tough questions.
We’re gonna have a deeper dive into the company’s latest earnings results.
Also the wedding business.
So has a heck of a lot of questions on that.
People come to my wedding.
That’s about it.
I mean, I know maybe one of my pets.
How about you?
Do you really want to come?
Good, uh Good gifts.
I give you for your another segment.
Great.
Thanks so much.
Coming up.
We are going to be taking a deep dive into the big deals in the energy space and what it means for the industry.
Plus the CEO of Chewy joining us here on set to talk consumer spending on pet some of the trends that he’s seeing within his business.
What it tells us about the health of the consumer that’s all coming up next on catalyst.
We’ll be right back.
(Reuters) – BHP Group said on Wednesday it did not intend to make a formal offer for Anglo American, walking away from its $49 billion takeover deal, after the London-listed rival refused to extend the bid deadline.
"We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost," BHP said in a statement, adding that it did not get "key information" from Anglo to address these risks.
Anglo rejected BHP's last-ditch request for more time to discuss a takeover offer, dismissing it as highly complex, after the miner had granted BHP a one-week extension to its original May 22 deadline to submit a binding offer.
(Reporting by Yadarisa Shabong and Pushkala Aripaka in Bengaluru; Editing by Shinjini Ganguli)
ConocoPhillips (COP) is set to acquire Marathon Oil (MRO) in an all-stock deal valued at $17.1 billion. Tortoise Portfolio Manager Rob Thummel joins the Morning Brief to explain why this acquisition has come as “a surprise.”
Thummel commends Marathon Oil’s management team, stating that they “have really done a great job of being capital disciplined.” This disciplined approach has resulted in a high free cash flow yield, which Thummel believes will be one of the most significant benefits to ConocoPhillips through this acquisition. However, Thummel describes Marathon Oil’s actual assets as “good, not great.”
For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.
This post was written by Angel Smith
Video Transcript
All right, another transaction we’re tracking here this morning, Anglo American officially rejecting BHPS request to extend the deadline for talks on its $49 billion takeover offer here.
I mean, just wanna get your reaction on this rejection here and what the signal is next.
Yeah, I’m not familiar with that transaction but, but I can tell you there’s a lot of transactions going in the mineral space, in the, in the oil and gas space.
Uh and, and, and obviously, valuation is always probably the biggest hurdle when it, when it comes to a lot of these transactions.
So, so that’s probably the biggest driver of, of, of what what’s causing this, the uh potential disruption of this transaction.
All right, let’s talk about Conocophillips because that’s the other big deal that we’re talking about within the space.
Conocophillips and uh Marathon Petroleum, the merger there.
Talk to me just about one, what this is going to do to Conocophillips business here and then two just what this tells us just about further consolidation, kind of go on what you were just talking about there before, but further consolidation within this space and the likelihood that this might remain a theme here for at least a quarters to come.
Yeah.
So this is a bit of a surprise.
And, uh, and I would say the reason and what I mean by that is, I don’t think anybody probably had marathon oil being acquired by Conocophillips.
Um, and, but, but when you look at it, uh, it does make some sense.
So if you look at the marathon oil assets, they’re good.
They’re not great.
But the management has really done a great job of the capital discipline and what that’s resulted in a is in a really high free cash flow yield from marathon oil.
So marathon oil actually has one of the highest free cash flow yields in the oil and gas space.
Um So that’s a bit attractive or that is attractive to somebody and, and obviously, Conco Phillis is, is, has found it the most attractive at this point.
So when you merge these assets together, what, what Conocophillips gets is some good assets in, in uh you know, across the Bakken in North Dakota, across the Permian and the Eagle Ford in, in, in Texas.
But it gets a lot of free cash flow that it, that then uh can redeploy.
And I think what, what kind of has done to Ryan Lance and the management have done?
They’ve been really, really good at allocating capital.
And so now they’re just getting more cash to allocate whether that’s to shareholders or, or to future acquisitions.
Um, they, they’ve done a really, really good job of allocating capital and this just gives them more capital to allocate in the future.
Is this likely to, uh, receive much regulatory scrutiny?
Do you think?
I think these all, all, all of these do?
Right.
But I, but I do think obviously less, it’ll, it’s a less, uh, less notoriety than a pioneer transaction or even a transaction.
But yes, it will go through the same process and uh and, and I, and I’m sure we’ll, we’ll go through the same uh rigor that all of these transactions have gone through at the FTC.
Really over the last three or four years, Rob Del Torres portfolio manager and managing director.
Thanks so much for taking the time here this morning, Rob.
I appreciate it.
Thank you.
(Updated – May 29, 2024 11:57 AM EDT)
Investing.com — U.S. stock futures fell Wednesday, with investors concerned that the Federal Reserve may keep interest rates elevated for longer than previously expected.
Here are some of the biggest U.S. stock movers today:
Nvidia (NASDAQ:NVDA) stock fell 0.25%, paring gains slightly after the tech giant’s hefty 7% gains the previous session.
American Airlines (NASDAQ:AAL) stock sank 15% after it cut its second-quarter earnings forecast on a more subdued outlook on travel demand. Peers Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV) were also lower.
Robinhood (NASDAQ:HOOD) stock rose 0.5% after the trading platform unveiled a stock buyback of $1 billion.
Marathon Oil (NYSE:MRO) (MRO) stock rose 9% after energy giant ConocoPhillips (NYSE:COP), down 3.5%, agreed to buy the Houston-based company, in an all-stock deal worth $17.1 billion that would strengthen the company’s shale assets.
Salesforce (NYSE:CRM) stock rose 0.6% ahead of the release of the business software group's fiscal first quarter earnings after the bell, with Wall Street likely on the lookout for updates on the business software group's Data Cloud division.
Dick’s Sporting Goods (DKS) stock rose 16% after the retailer raised its full-year guidance after customers spent more on new sneakers and athletic gear at its big-box stores.
BHP Group (NYSE:BHP) ADRs rose 1% after the mining giant asked for more time to hold talks with Anglo American (JO:AGLJ), subsequently denied by Anglo, as a deadline for a formal offer loomed large. BHP no longer intends to make a firm offer.
CAVA Group (CAVA) was volatile after the Mediterranean food chain reported a decline in customer traffic in the first quarter, overshadowing the raising of its annual sales outlook. The stock erased a pre-open decline of over 6%.
UnitedHealth Group (NYSE:UNH) declined 4.5% after it warned about risks for its Medicaid business during a presentation. Peers Centene (NYSE:CNC), Molina Healthcare (NYSE:MOH), Humana (NYSE:HUM) and Elevance Health (ELV) also declined.
Toast (TOST) fell 6.5% after it updated its two to three year target for profit growth and expansion during an investor presentation, disappointing investors banking on faster growth.
Chewy (NYSE:CHWY) rose nearly 30% after beating first quarter EPS estimates and issuing strong guidance for the second quarter and full year.
Additional reporting by Louis Juricic
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Mining company Anglo American has rejected calls from suitor BHP to extend a deadline to strike a takeover deal.
The pair have been in talks over a deal worth almost £39 billion since Wednesday May 22 amid efforts to agree on the structure for a potential takeover of Anglo American.
Australia’s BHP faces a deadline of 5pm on Wednesday to make a firm offer or walk away.
On Wednesday morning, BHP urged its smaller rival to grant it an extension amid continued discussions between the two companies.
It said it had put forward a number of “socioeconomic measures” in an attempt to ease concerns over its bid, and called for more time to discuss these with Anglo American.
BHP’s three takeover approaches all had a requirement for its rival to spin off its South African operations, resulting in heavy criticism from the government in Pretoria.
Anglo American also opposed this.
In a statement on Wednesday, BHP said: “BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination.
“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal.
“This announcement does not amount to a firm intention to make an offer and there can be no certainty that an offer will be made.”
However, later on Wednesday, Anglo American rejected the move and said there is “no basis” for an extension.
It said in a statement: “BHP has not addressed the board’s fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American’s shareholders.
“Also taking into consideration detailed feedback from the board’s extensive engagement with Anglo American’s shareholders and stakeholders, the board has therefore unanimously concluded that there is no basis for a further extension to the Pusu (put up or shut up) deadline.”
A mega-merger between the two companies would create the biggest copper miner in the world, with 10% of global output.
Anglo American’s vast reserves of copper are a key driver of the interest in the business, as the mineral is an important building block for low-carbon technologies such as solar farms and electric cars.
Earlier this month, Anglo American announced plans to break up major parts of the business and heavily slow down its development of a £7 billion North Yorkshire fertiliser mine.
Mining giant BHP has urged takeover target Anglo American to extend its deadline as talks continue between the two rivals.
The companies have been in talks over a deal worth almost £39 billion since Wednesday May 22 amid efforts to agree on the structure for a potential takeover.
Australia’s BHP faces a deadline of 5pm on Wednesday to make a firm offer or walk away from takeover talks.
The mining firm said it had put forward a number of “socioeconomic measures” in a bid to ease concerns over its bid and called for more time to discuss this with Anglo American.
BHP’s three takeover approaches all had a requirement for its rival to spin off its South African operations, resulting in heavy criticism from the government in Pretoria.
Anglo American also opposed this.
In a statement on Wednesday, BHP said: “BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination.
“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal.
“This announcement does not amount to a firm intention to make an offer and there can be no certainty that an offer will be made.”
A mega-merger between the two companies would create the biggest copper miner in the world, with 10% of global output.
Anglo American’s vast reserves of copper are a key driver of the interest in the business, as the mineral is an important building block for low-carbon technologies such as solar farms and electric cars.
Earlier this month, Anglo American announced plans to break up major parts of the business and heavily slow down its development of a £7 billion North Yorkshire fertiliser mine.
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