Mark Kleinman: BP bid may be more likely from Exxon than Shell
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly CityAM column
BP bid may be more likely from Exxon than UK rival Shell
Takeover rumours in the London market don’t come with a more spectacular veneer than when they’re attached to BP. Unfortunately for Murray Auchincloss, the British oil company’s chief executive, neither have they ever been more credible than right now
Such has been the cataclysmic value destruction at BP in recent years that its market capitalisation – at a mere £56bn – is now less than half that of Shell, and is miniscule in the context of the industry majors.
Add to that the general malaise around BP; its search for a new chairman to replace the disappointing Helge Lund; its strategic schizophrenia; and the appearance of Elliott Advisers, the activist investor, on its share register, and you might conclude that one of Britain’s most historic companies is now little more than a sitting duck.
That doesn’t necessarily mean, of course, that BP is about to be taken over, or even that its board will be in receipt of a formal offer.
Shell has been running the numbers on a bid in recent months – it would be illogical had it not. When Shell’s chief executive, Wael Sawan, said recently that he would rather deploy surplus capital on buying his own shares back than acquiring those of BP, he was employing a healthy degree of sophistry. Insiders say the ‘cook-book’ of M&A scenarios which all the oil majors have at their disposal (and are constantly updating) would imply that a value-accretive offer from Shell for BP is not very far from being activated – even with a conventional bid premium factored in.
Nevertheless, the dark horse here might be ExxonMobil, for which a takeover of BP would arguably be even more strategically compelling.
The two companies have a more complementary upstream portfolio, while the complexities of unstitching their combined downstream businesses would also be more limited than those in a Shell-BP combination. Exxon would also love to get its hands on BP’s leading energy trading division.
Whether the UK government would seek to stand in the way of a US takeover of BP is debatable – but it just might get put to the test.
Big trouble in little tagging technology company
Big Technologies? Big Trouble might be a more apt name for the London-listed provider of electronic location tagging services to police forces, probation services and social care operators.
The company, which trades as Buddi, has seen its shares tank amid allegations that founder Sara Murray had undisclosed relationships with a quartet of entities which held nearly 18% of its shares.
Murray – who has denied Big Technologies’ claims – was sacked at the end of March, sparking a wave of counter-recriminations. There are suggestions that the Takeover Panel is exploring whether she now needs to make a mandatory offer for the rest of the shares at the original price, which might cost in the region of £600m.
Last week, things got messier. Her successor as interim chief executive, Daren Morris, also stepped down, little more than a month after assuming the post.
He went with the company expressing its gratitude, but the speed of his departure spoke of a fractious atmosphere behind closed doors. I understand that Harwood Capital, the fund manager run by the pugnacious City veteran Christopher Mills, threatened to call an extraordinary general meeting unless Morris was replaced.
That threat has been averted by the appointment of Ian Johnson, a life sciences executive who clearly has Harwood’s backing. How he clears up the mess at Big Technologies is another question. Once valued at about £1bn, the AIM-listed stock now languishes at less than a quarter of its peak valuation.
If its numbers are to be believed, a robust business exists beneath the current dark clouds. I wouldn’t bet against it disappearing from the stock market before the end of the year. It certainly hasn’t been much of a Buddi to its public shareholders.
For Playtech, read pay cheque as next remuneration row looms
You get a big pay cheque if you work for Playtech. It sounds like a catchy advertising slogan, but it’s more readily identifiable as a truism about the gambling technology company’s boardroom.
Pay rows and Playtech have long been synonymous, and in the wake of its €2.3bn disposal of Snaitech to Flutter Entertainment, this year is no exception.
At its annual meeting later this month, Playtech faces a backlash over plans to hand Mor Weizer, its chief executive, and other senior managers a bonus pool worth tens of millions of pounds.
One investor had already labelled the €100m bonanza “the most egregious case of shareholder value expropriation in the history of UK public markets”.
That might be a stretch, but it’s hardly surprising that Institutional Shareholder Services (ISS), the influential proxy adviser, has red-flagged the payouts.
According to its report to clients, not only should investors vote against the pay arrangements themselves, they should also oppose the re-election of four Playtech non-executive directors, including Ian Penrose, a well-known figure in British leisure industry boardrooms.
Shorn of its Italian consumer betting arm, Playtech is now a pureplay gambling technology company which few observers expect to remain independent for long.
Should it survive another year, avoiding another pay row might end up being new chairman John Gleasure’s biggest achievement.