Chapter 1: What is the main topic discussed in this episode?
Good morning from the Financial Times. Today is Wednesday, May 27th, and this is your FT News Briefing. Iran is criticizing the U.S. for recent strikes, and BP is going through yet another shakeup. Plus, international companies are loving U.K. mid-caps. We'll tell you why. I'm Mark Filippino, and here's the news you need to start your day. Iran has accused the U.S.
Chapter 2: What recent actions has Iran taken against the US?
of, quote, flagrant violations of the ceasefire they agreed to in early April. This comes after American forces on Monday carried out airstrikes against Iranian missile launchers and boats. But despite this flare up, back channel talks continued. Iran's top negotiators returned to Tehran late yesterday after two days of talks in Doha.
The two countries are trying to finalize an agreement that would extend a ceasefire by 60 days and reopen the Strait of Hormuz. The deal would also lay the foundation for negotiations on Iran's nuclear program. The cost of oil jumped yesterday, with Brent crude up a little bit more than 3.5%. BP has removed its chair, Albert Manifold. The UK oil major cited serious concerns about his conduct.
This is the latest blow to BP, which has suffered years of strategic and boardroom upheaval. I'm joined now by the FT's energy correspondent, Verity Radcliffe, to discuss this. Hi, Verity.
Hi.
So, Verity, do we know why Manifold was removed?
Well, the company put out a short statement that gave very broad reasons, but just the tone of the statement gave market watchers some idea that this was quite a serious issue that he'd been pulled up on. There were quite a few frustrations when it comes to how Manifold was dealing with the business. He was acting, some say, more as an executive chair.
He was expecting to control a lot more of what the company was doing in terms of its operations. He was quite pushy, quite, some might say, bullying in trying to dictate what the company was trying to achieve and how they were going to go about doing it. He was seen as this change operator, which was desperately needed by the company at the time where he came in.
But they perhaps didn't anticipate just how divisive this figure was going to be within the company.
Now, we should mention that Manifold told the FT that BP's decision to remove him came, quote, out of the blue, and that he needed time to reflect before commenting further. Verity, it's probably important to understand the backdrop here, right? Because if you look at the broader context, there have been quite a few management shakeups at BP over the past couple of years.
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Chapter 3: Why did BP remove its chair, Albert Manifold?
First was for Tate & Lyle, the ingredients group. Everyone thinks of that one as a sugar company, but it's not these days. They've had a £2.7 billion approach, and this is from a fellow ingredients company called Ingredian, which is a US mid-cap and sort of in the same industry. Now, they're in talks at the moment. The second was Spire Healthcare.
It's a private hospital operator, and someone's approached it with second largest shareholder, offering almost a billion pounds. They've yet to make a firm offer, but that one looks like quite a positive development as well.
Got it. So how does activity in the mid-cap market compare to, say, bigger companies that are listed on the main FTSE 100?
Well, mid-caps are always an interesting space because they're companies on their way down. You might say Tate and Lyle, once a FTSE 100 company is one of those. And those on their way up, the up and coming companies, the next big blue chips. So for M&A though, for mergers and acquisitions, mid-cap is really the engine of that market.
They're easier for other companies to buy, to digest, attracted to private equity as well. And you often get a lot of strategic buyers in the same industry. Blue chips are the real headline deals. That's like the multi, multi, multi billion, billion pound deals. But the mid-caps are what keeps that market going.
So what kind of valuation is being put on UK mid-cap companies? And I guess, you know, how does this pricing compare to what's been happening in the US mid-cap market?
Well, the problem for the UK mid-caps is that that sort of sector is often much more domestic, whereas blue chips are much more international. So the problem is that the UK has had quite a few years now of very lacklustre productivity growth, not particularly great economic growth and a lot of political grumbling about all of this.
So they've suffered from that sort of backdrop and their valuations have come down. At the same time, US mid-caps, for example, have been doing much better. So their share prices have been rising, which makes the UK look an attractive market if there's a sort of a confident US mid-cap out there that wants to come fishing.
So what's your takeaway about this revival of the interest in UK medium-sized companies?
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