Weekly Market Update – 31/05/2024

After weeks of negotiations, this week Czech billionaire Daniel Křetínský has agreed to buy the owner of Royal Mail, International Distribution Services, for 370p per share, valuing the group at £5.3bn. Křetínský’s EP Group must meet commitments such as retaining its UK headquarters and maintaining Royal Mail’s obligation to deliver mail everywhere in the UK at the same cost, but these have only been made for five years. However, the share price remains around 332p at the time of writing as shareholders doubt whether the deal will ultimately come to fruition.

Following on from the agreed takeover of IDS, there was not such good news for BHP as their £39bn takeover bid for Anglo American has collapsed after six weeks of negotiations. BHP must now wait six months before it can approach Anglo again under London stock market rules. Anglo dismissed BHP’s offer as “highly complex and unattractive” and has proposed to break itself up, with pressure on Anglo’s chief Duncan Wanblad to now deliver on this restructure.

Falling prices of furniture and other non-food items helped to ease UK shop inflation in May. Store prices rose at an annual rate of 0.6%, down from 0.8% in April, as retailers lowered prices to boost demand in light of the dismal UK weather. This is well below the 9.0% peak a year ago, helping to ease pressures on consumers. However, whilst food price growth continued to fall, coming in at 3.2% in May, ambient food price growth has remained stickier, falling just 0.1% month on month to 4.8%, as high global sugar prices continue to affect the price of sugary products.

Andrea Wood, Chartered MCSI
Investment Manager