Good morning. Today we're talking about the Royal Mail’s new Czech owner, Abercrombie’s revival and the end of the mining mega merger.

Big Stories

Royal Mail takeover looms

Royal Mail’s parent company International Distributions Services (IDS) is on the brink of a takeover after it accepted Czech billionaire Daniel Kretinsky's £3.57bn offer. The potential end to 500 years of British ownership of Royal Mail has sparked controversy. While Kretinsky, already a major IDS shareholder, assures continued core services like six-day-a-week mail delivery for at least five years, the deal faces significant roadblocks. First, the National Security and Investment Act empowers the UK government to block acquisitions deemed threats to critical national infrastructure. Given Royal Mail's vital role, it's a prime candidate for scrutiny. This uncertainty is reflected in IDS's stock price, currently below the offer price. Second, unions fear the deal could lead to job cuts and service reductions, echoing anxieties that plagued Royal Mail since it was privatised in 2013. A sharp drop in service demand and management failings contributed to a £348m loss in the year to March 2024 underscoring the challenges the company faces.

Abercrombie 90s revival

Abercrombie & Fitch is experiencing a remarkable comeback, with a projected second consecutive year of double-digit sales growth – a first in over a decade. This resurgence follows a major brand overhaul. The company, once synonymous with shirtless models and teen clothing in the 90s, has shifted its focus to adults. The brand now offers wedding attire, work-appropriate clothing and looser trousers. It has also embraced inclusivity with a wider size range, a stark contrast to their exclusionary past under former CEO Mike Jeffries. This rapid turnaround is reflected in the 245% stock price increase in the past year. With the rebranding seemingly complete, Abercrombie is setting its sights on global expansion, targeting key markets like the UK, Germany and China.

Mining merger talks end

BHP has abandoned its $49.3bn bid to acquire Anglo American, putting pressure on both companies. This ends a five-week public battle and leaves Anglo CEO with the challenge of delivering on his turnaround plan. BHP, on the other hand, will need to find alternative sources for the copper growth they were hoping to gain through the merger. Anglo American had repeatedly rejected the offer due to its complex structure, which involved them spinning off lucrative South African units. BHP was primarily interested in copper, coking coal, and potash, all minerals crucial for the renewable energy transition.

Elsewhere...

Property prices: UK house prices returned to growth in May after rising by 0.4%, according to Nationwide, as buyers' confidence was buoyed by wage growth and lower inflation.

Lawyer inflation: Clifford Chance has become the latest Magic Circle law firm to increase the salaries of its most junior lawyers to £150,000.

Listing shakeup: Ocado is set to leave the FTSE 100 after a drop in its share price, piling pressure on the business to consider ditching London for New York.

No longer daily: The Evening Standard newspaper will scrap its daily print edition after 200 years, blaming better internet coverage on the tube and a shift to working from home.

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