Anglo American has received a $39billion (£31billion) takeover offer from Australian mining giant BHP, sparking fears that the London Stock Exchange could suffer an exodus of its biggest companies.
The all-share offer from BHP for Anglo, the 21st largest company in the FTSE 100, would create the world’s biggest copper miner. It would also make BHP the owner of diamonds giant De Beers. Anglo said that it is reviewing the “unsolicited, non-binding and highly conditional” offer with its advisers.
Fears are growing in the City that if Anglo succumbs to the offer from BHP, which itself moved its primary listing from the LSE to Sydney two years ago, more of the exchange’s biggest companies could leave.
The LSE has struggled to attract fresh flotations, most notably being snubbed by British microchip designer Arm, which opt to list on the Nasdaq in New York instead of London, while at the same time, it has lost a number of companies to private equity buyouts and foreign takeovers and to other exchanges.
Earlier this month, Shell rattled the London market by threatening to defect to New York and FTSE 100 packaging giant DS Smith agreed to sell itself to US rival International Paper. Ocado is rumoured to be considering a New York listing.
Susannah Streeter, Hargreaves Lansdown’s head of money and markets, said: “The buyout offer from BHP for Anglo won’t just shake up the mining industry, but will send a fresh chill through the City of London. There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange.”
AJ Bell investment analyst Dan Coatsworth said that LSE chief executive David Schwimmer has to act to quickly to prevent the market from being permanently weakened by an exodus of its biggest companies.
“The London stock market is shrinking fast as companies are either taken over, switch listing to the US or delist to get out of the public’s eye. It’s crisis time for the LSE as it fights to preserve the integrity of the UK market,” he said. “Schwimmer needs to find a way to replenish the pot of companies on the London market.”
