Bob Diamond’s mid-market adventure

One thing to start: BP has decided to appoint interim boss Murray Auchincloss as its permanent chief executive.

In today’s newsletter:

Bob Diamond bets UK market has hidden gems

Former Barclays boss Bob Diamond has come a long way from his former perch at the top of British finance. He is now doing deals among London’s mid-market brokerages.

On Tuesday, he unveiled a merger that will see Panmure Gordon, the City stockbroker he owns via his investment group Atlas Merchant Capital, combine with competitor Liberum.

London brokerages such as Panmure Gordon and Liberum face a challenging backdrop, squeezed by recent regulations and a dearth of UK listings to advise on. That has spurred the industry towards combinations, with this week’s tie-up just the latest.

At the helm of the newly combined business will be the flamboyant Rich Ricci, currently Panmure Gordon’s chief executive and a former right-hand man to Diamond at Barclays who has featured regularly in tabloids and owned a racehorse called Fat Cat in the Hat.

He will be chief executive of the enlarged group, tasked with turning it round after both Liberum and Panmure posted losses in 2022, their latest public accounts.

“The sector needs consolidation because ultimately the economics of the sector means there’s too many players,” Panmure Gordon’s president Richard Morecombe told the FT.

The newly combined business will have more than 250 clients — becoming the largest adviser to UK-quoted companies — providing everything from advice on acquisitions to equity research.

Executives hope the scaled group will be able to expand in its existing businesses and enter new markets while saving on costs.

It’s just the latest combination in a shrinking sector that follows last year’s tie-up between UK small-cap brokers Cenkos and FinnCap and Deutsche Bank’s agreement to buy the UK broker Numis for £410mn.

Our colleagues at FT Alphaville are already rolling out the welcome mat for “Liberumanure, the City’s biggest new subscale stockbroker”.

For Diamond, who has also made forays into other markets including the world of Spacs, it is a chance to help the smaller businesses that he called “the lifeblood of the UK economy”.

But amid London’s freezing temperatures and frozen market, it may just represent the fact that “UK brokers must huddle together for warmth”, write our colleagues at Lex. 

Tesla’s Chinese rival bets on Brazil

After overtaking Tesla as the world’s largest electric vehicle maker, what do you aim for next?

For Chinese automotive group BYD, it seems the answer lies in Brazil.

As the company of the moment builds its first electric car factory outside Asia in the Latin American country, it is also eyeing up lithium assets there.

BYD’s chair in Brazil, Alexandre Baldy, told the FT it had held talks with $3bn-valued Sigma Lithium about a possible supply agreement, joint venture or takeover. 

The discussions highlight BYD’s fully vertically integrated business model — it spans from owning lithium mines to in-house chip manufacturing — which is credited with enabling it to sell high-tech EVs at a low cost.

They also showcase Brazil’s emergence as a source of the silvery white metal — a critical material for EV batteries — behind big suppliers Australia, Chile, China and Argentina.

Listed on Nasdaq and in Toronto, Sigma began production last year and markets its product as “green”. Chief executive Ana Cabral Gardner is a regular at high-profile international conferences attended by the corporate world’s great and good.

As it conducts a strategic review that could result in a sale of the business, Sigma is in parallel pursuing a listing of its Brazilian unit on Nasdaq and the Singapore Stock Exchange. 

According to local reports, Volkswagen and Chinese battery maker CATL are also bidders.

The suitors will be hoping they’re in for a bargain. Sigma’s Canadian shares are down about one-third since September, reflecting the plunge in lithium prices. 

And for all the glory of stealing Tesla’s crown this month, BYD’s stock has fallen around a quarter over the past year. 

Warren Buffett’s Berkshire Hathaway, which has made billions off a $230mn bet in the Chinese group back in 2008, has been selling down its holding since 2022.

This week one FT columnist even asked if, despite all the buzz, the Chinese automaker has already peaked. 

DoJ doesn’t feel the Spirit

US antitrust cops are fighting cases against some of the most popular companies in the world, like Amazon and Apple. But now they’ve won a big victory involving Spirit Airlines, a carrier often scorned by air travellers.

On Tuesday, a US federal judge blocked JetBlue Airways’ proposed $3.8bn acquisition of Spirit, sealing an apparent victory for the Biden administration’s top antitrust enforcer at the Department of Justice, reports the FT. 

The order is a win for the DoJ’s antitrust unit, which has ushered in a tougher enforcement stance under the leadership of Jonathan Kanter. He believes US business has faced excessively lax antitrust scrutiny for decades and vowed to crack down on anti-competitive conduct across the economy. 

His arguments appear to have succeeded against an industry that in recent decades has rapidly consolidated. Four big carriers — American Airlines, United Airlines, Delta Air Lines and Southwest Airlines — together control about 80 per cent of the market. 

JetBlue was victorious in a bidding war with Frontier Airlines to acquire Spirit in 2022. The deal would have combined two leading low-cost carriers in the US and created the fifth-largest domestic airline with approximately 10 per cent market share.

“[I]f JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Judge William Young wrote in his order.

JetBlue shareholders will foot a large break-up fee, but they cheered the decision. The airline’s stock rose over 4 per cent. Spirit plunged by roughly half, underscoring its precarious standalone financial position.

Job moves

• Dyson has named former Aston Martin and JLR director Hanno Kirner as its chief executive, as it increases its focus on battery technology. Kirner will replace Roland Krueger, who will take a new position on the board of Dyson’s holding company.

• The Ontario Teachers’ Pension Plan board has appointed Stephen McLennan as chief investment officer in asset allocation and Gillian Brown as chief investment officer for public and private investments. Jonathan Hausman will take on a newly created role as chief strategy officer and all three will report to president and chief executive Jo Taylor.

Smart reads

Blackstone’s bet US private equity group Blackstone made a savvy investment in 2021 into a little-known tech group active in the US’s booming online betting industry, writes the FT.

Brazil’s blueprint Since returning to power, Brazil’s President Luiz Inácio Lula da Silva has looked to strengthen the role of the state in his bid to lift stagnant living standards, reports the FT.

Bain’s bummer A pair of failed approaches for European software deals by Bain Capital have raised the stakes the next time the US buyout firm attempts a deal in this sector, comments Bloomberg’s Chris Hughes.

News round-up

Synopsys to buy Ansys in $35bn design software deal (FT)

Goldman Sachs and Morgan Stanley report lowest profits in 4 years (FT)

Shell agrees to dispose of Nigerian business for $1.3bn after 68 years (FT)

More Heathrow shareholders plan to sell stakes alongside Ferrovial (FT)

Northvolt confirms $5bn debt financing round (FT)

London townhouse linked to Baroness Mone’s husband on sale for £25mn (FT)

Cash-strapped BBC sells off Elstree home of ‘EastEnders’ (FT)