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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak Europ podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Thursday, the

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Speaker 2: thirtieth of May in London. I'm Stephen Carroll coming up today.

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Speaker 2: The mining giant BHP abandons its forty nine billion dollar

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Speaker 2: bid for Anglo American after its small arrival refuses further talks.

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Speaker 2: JP Morgan CEO Jamie Diamond warns there could be hell

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Speaker 2: to pay if private credit sours, plus Wall Street firms

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Speaker 2: are buying up family owned businesses across the globe. The

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Speaker 2: UK's richest plumber tells Bloomberg he regrets his one hundred

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Speaker 2: and seventy eight million dollar decision to sell. Let's start

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Speaker 2: with the roundup of our top stories. BHP has abandoned

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Speaker 2: its forty nine billion dollar bid for Anglo American, ending

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Speaker 2: hopes of the biggest mining deal in over a decade.

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Speaker 2: The announcement, less than an hour before a five pm

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Speaker 2: UK deadline yesterday, marked an abrupt end to the five

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Speaker 2: week public battle between two of mining's biggest names.

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Speaker 3: Bloomberg's Clara Frera.

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Speaker 2: Marcus says the deal the fact, the deal came so close,

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Speaker 2: says a lot about the state of the market.

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Speaker 4: BHP has come out and said that it needs copper

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Speaker 4: so badly that it would go ahead with this extremely

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Speaker 4: complex transaction. Of course, now what we need to see

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Speaker 4: is what they do over the next six months and

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Speaker 4: when Anglo comes back into play of what happens then.

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Speaker 2: As Clara Freer Marcus notes, PHP is now blocked from

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Speaker 2: bidding for the smaller copper miner again for six months.

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Speaker 2: The acrimonious end to the possible deal will now acted

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Speaker 2: up pressure on the Anglo chief executive Duncan Juan Blat

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Speaker 2: to deliver on an ambitious turnaround plan. Jamie Diamond says

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Speaker 2: he anticipates problems emerging in private credit that could lead

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Speaker 2: to a political backlash. The warning comes as JP Morgan

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Speaker 2: and other lenders look to make increasing inroads into the

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Speaker 2: one point seven trillion dollar private credit industry. Speaking during

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Speaker 2: an industry conference, Diamond says he's particularly concerned about the

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Speaker 2: risk to retail clients as they gain access to the

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Speaker 2: booming asset class.

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Speaker 5: They have not been stress tested. People really fully understand

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Speaker 5: what I said about interest rates affecting what these things

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Speaker 5: are worth. Do they and if a little old lady

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Speaker 5: finds out that she can't get her money back and

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Speaker 5: there may have been disclosed, they're saying, you know, this

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Speaker 5: money's locked up for five years. But you know what,

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Speaker 5: retail clients had to circle the block and call their

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Speaker 5: centers and congressmen and they could be held to pay.

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Speaker 2: Jamie Diamond's comments come after the CEO wrote in his

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Speaker 2: annual letter to shareholders that the private credit industry has

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Speaker 2: not yet been tested by bad markets. JP Morgan's Deer

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Speaker 2: marks more than ten billion dollars of its own balance

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Speaker 2: sheet for direct lending, while rival Goldman Sachs just announced

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Speaker 2: it's put together twenty one billion dollars for private credit

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Speaker 2: wagers for the first time in its history. The European

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Speaker 2: Central Bank is to find lenders for missing climate goals.

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Speaker 2: Bloomberg has learned as many as four lenders are facing

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Speaker 2: daily financial penalties. The amounts aren't yet finalized and maybe symbolic,

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Speaker 2: but could amount to as much as five percent of

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Speaker 2: daily revenue. E regulations require banks to assess whether they

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Speaker 2: are or will be exposed to material risks from climate

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Speaker 2: change that they reflect that in their capital reserves. Sadi

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Speaker 2: Arabia is planning in a Ramco share sale that could

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Speaker 2: raise more than ten billion dollars. Bloomberg has learned that

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Speaker 2: Riad will take orders from Sunday to next Thursday. Our

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Speaker 2: senior energy reporter, Stephen Stopchinsky, says investors have already expressed

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Speaker 2: an interest.

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Speaker 6: The initial offering a few years back for a Ramco

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Speaker 6: was thirty billion dollars, so this is a smaller tranch.

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Speaker 6: So far in interest has been from investors in the

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Speaker 6: Middle East Europe. But I do have to clarify.

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Speaker 7: That nothing has been decided yet the time, the exact

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Speaker 7: timing and the size of it is still in flux.

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Speaker 7: But what we're hearing is they're aiming for that ten

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Speaker 7: billion at least.

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Speaker 2: Steven Chapcinski, adding that a Ramco stocks dropped by about

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Speaker 2: eleven percent since the start of the year, when Bloomberg

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Speaker 2: first reported the government's plans to offload a stake. China

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Speaker 2: is poised to impose a record fine on accounting giant

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Speaker 2: PwC over its auditing work on the collapsed property Giant.

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Speaker 2: Evergrand sources have told Bloomberg that the company faces a

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Speaker 2: fine of at least one hundred and thirty eight million

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Speaker 2: dollars and the suspension of some of its local operations.

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Speaker 2: PwC has been under the spotlight after China's securities regulator

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Speaker 2: launched one of the biggest investigations of alleged financial fraud

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Speaker 2: in its history, involving Evergrand. The auditor hasn't responded to

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Speaker 2: Bloomberg requests for comment, and the FBI says it's taken

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Speaker 2: down a massive global army of zombie computer devices. Bloomberg's

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Speaker 2: Ed Baxter has the story.

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Speaker 8: The FBI says the button nets, spread across more than

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Speaker 8: one hundred and ninety countries, enabled financial fraud, identity theft,

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Speaker 8: and access to child exploitation materials or on the globe.

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Speaker 8: FBI Director Christopher Ray issued a statement saying it included

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Speaker 8: bomb threats and cyber attacks that likely were leading to

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Speaker 8: billions of dollars in victim lodges. The botnet was tied

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Speaker 8: to more than six hundred and thirteen thousand IP addresses

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Speaker 8: located in the US. Law enforcement seized internet equipment assets,

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Speaker 8: and Lavage sanctions. Ed Baxter Bloomberg Radio.

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Speaker 2: Well, in a moment, we'll bring you more on that

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Speaker 2: mega mining deal that's been called off pletus tell you

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Speaker 2: about a British plumbing entrepreneur, he's found a spanner in

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Speaker 2: the works of selling his company to private equity. But

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Speaker 2: another story that caught our eye this morning about the

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Speaker 2: galaxy of Elon Musk's companies that are under threat as

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Speaker 2: problems at Tesla spiral. It's today's Bloomberg Big Take report,

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Speaker 2: a fascinating examination of the six different companies that Musk

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Speaker 2: runs and the key people around him, many of whom

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Speaker 2: have roles in more than one of the firms, and

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Speaker 2: it unravels some of the crossover among those different companies,

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Speaker 2: from Tesla to SpaceX to the social media site x.

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Speaker 2: Often these companies share resources, but also executives who hop

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Speaker 2: between roles and what are completely different businesses. It's great

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Speaker 2: insight into how Elon Musk's business world operates, and comes

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Speaker 2: with some great Space themed graphics as well. You'll find

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Speaker 2: it on the Bloomberg website and on the terminal as well.

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Speaker 4: Well.

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Speaker 3: That's return to.

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Speaker 2: Our top story, BHP walking away from its bid to

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Speaker 2: buy Anglo American, the announcement coming yesterday bringing to end

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Speaker 2: a five week public battle between two of mining's biggest names.

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Speaker 2: For more, let's speak to our managing editor for Commodities

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Speaker 2: and Energy in Asia, Clara Ferrara at Marquez, Clara, great

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Speaker 2: to have you with us. Why did BHP then give

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Speaker 2: up on this deal?

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Speaker 3: Well, I think.

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Speaker 4: BHP had very little choice when they kept coming back

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Speaker 4: and Anglo kept rebuffing them, and yesterday, early in the day,

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Speaker 4: they came and laid out their final concessions, especially around

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Speaker 4: the South African assets, which was really the crux. How

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Speaker 4: they managed South Africa was really the crux of the agreement.

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Speaker 4: At that point, we knew that things were not going well.

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Speaker 4: They had taken things public. They were trying to press

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Speaker 4: Anglo's shareholders to press the board in turn to agree

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Speaker 4: to an extension in talks with BHP. When Anglo did

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Speaker 4: not agree, BHP had a little option but to either

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Speaker 4: throw money at the problem and walk away. And shareholders

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Speaker 4: today are quite believed to see that what they did

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Speaker 4: was walk away and take a six month break.

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Speaker 3: Well, is this just a break?

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Speaker 2: Could be HP try again when regulations allow in six months?

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Speaker 4: That's a really interesting question. I think a lot will

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Speaker 4: depend on Anglo. Anglo has its own self help plan.

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Speaker 4: So when BHP came up with this quite convoluted structure

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Speaker 4: which involves, you know, asking Anglo to spin off its

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Speaker 4: platinum and its South African iron ore business and then

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Speaker 4: BHP would take over the rest. What Anglo proposed was

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Speaker 4: its own version of that, a similar simplification that would

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Speaker 4: bring the group down to really focus on copper and

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Speaker 4: iron ore. And now what we have to see is

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Speaker 4: whether Anglo can execute that. The pressure real years on

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Speaker 4: CEO Duncan one blood. He really has not a very

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Speaker 4: long time. I think it will depend how long shareholders

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Speaker 4: give him, and he doesn't have a very long time.

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Speaker 4: And these are very complicated transactions. There is really no

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Speaker 4: natural buyer for assets like de Beers, the big diamond producer,

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Speaker 4: or indeed for platinum. So a tricky one and it

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Speaker 4: will really depend on how they do. If they manage

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Speaker 4: to do that, then BHP has the option of buying

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Speaker 4: what's left, which ultimately is what they wanted in the

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Speaker 4: first place, or if they don't succeed, BHP will probably

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Speaker 4: be taking another having another go at Anglo at perhaps

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Speaker 4: a lower price.

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Speaker 2: Yeah, and that makes it for a very interesting six

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Speaker 2: months ahead for Anglo American. What does a future Anglo

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Speaker 2: American look like at this stage?

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Speaker 4: Well, yeah, as I say, It will all depend on

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Speaker 4: how much they can carry out themselves. This is something

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Speaker 4: you know, It's not the first time that Anglo has

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Speaker 4: tried the simplification Anglo American. The breakup of Anglo American

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Speaker 4: has been a parlor game in the mining industry for

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Speaker 4: years and years, so it's very interesting that we have

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Speaker 4: got to that point. We've also cleared the South African election,

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Speaker 4: which had sort of made the politics of this very

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Speaker 4: difficult to manage. So what they have to do now

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Speaker 4: is find buyers, move those assets along, focus on their

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Speaker 4: prime copper assets and on iron ore, both in South

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Speaker 4: Africa and in Brazil. If they can do that, they

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Speaker 4: will be in pretty good shape. If they can't, they

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Speaker 4: then become a target not only for BHP, but for

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Speaker 4: many others in the sector who are all looking at copper.

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Speaker 4: That would include Rio Tinto and almost certainly Glencore.

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Speaker 2: How much does the experience or watching this BHP attempt

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Speaker 2: to buy Anglo America now, is that going to be

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Speaker 2: a cautionary tail for those who might bid for some

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Speaker 2: of those businesses that Anglo American is trying to spin off.

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Speaker 4: I think it's slightly different situations. So if you want

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Speaker 4: to buy, for example, the metallurgical coal business that Angler

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Speaker 4: may sell, or you want to buy the platinum business

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Speaker 4: you're selling businesses that Anglo has already earmarked. I think

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Speaker 4: the interesting takeaway from the past few weeks the way

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Speaker 4: that the entire mining industry has been focused on this deal.

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Speaker 4: We haven't had a deal of anything close to this

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Speaker 4: scale probably since Glencortokik Strata, so more than a decade.

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Speaker 4: So it's really been sort of mesmerizing the industry. But

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Speaker 4: the interesting thing is how in the NBHP walked away

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Speaker 4: they chose not to throw money at the problem. They

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Speaker 4: also didn't throw any cash at the problem, which is

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Speaker 4: important though that's really that was at the core of

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Speaker 4: some of the worst deals the mining industry did in

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Speaker 4: the last boom. So I think a lot of the

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Speaker 4: lesson that people will take from this is perhaps a

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Speaker 4: newfound restraint that I guess going forward. What we'll need

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Speaker 4: to know is whether that was restraint will get them

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Speaker 4: the growth that they need, and perhaps we might need

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Speaker 4: a new generation of CEOs to come in and empire

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Speaker 4: build once again.

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Speaker 2: What happens for BHP now, is it going to go

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Speaker 2: looking for other acquisition targets.

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Speaker 4: There aren't that many. I mean, that is the problem

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Speaker 4: with kopper. The acquisition targets are very few, and they

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Speaker 4: are well known in the industry, and they are very expensive.

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Speaker 4: That's why these deals don't happen. The pure play copper

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Speaker 4: players are usually unaccessible. So for example, if you think

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Speaker 4: about Anti Fagasto to Chilean player, it's owned by a family.

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Speaker 4: The same with First Quantum owns Copper Panama, which has

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Speaker 4: its own very complicated story.

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Speaker 3: It's really very.

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Speaker 4: Difficult to identify obvious prey in the sector, which is

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Speaker 4: why BHP was willing to go to all these lengths

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Speaker 4: to get these prize assets in Chile that in Chile

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Speaker 4: improve the Anglo American holds it does have. BHP has

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Speaker 4: plenty of growth options of its own, so it will

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Speaker 4: probably pursue those so what we would call greenfield, so

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Speaker 4: expanding its own production, exploring and developing those minds. But

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Speaker 4: it's a very slow process, so almost certainly they will

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Speaker 4: be looking at other options, and others of course will

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Speaker 4: be looking at Anglo and and how this situation develops.

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Speaker 4: I think it's fair to say that copper really will

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Speaker 4: be at the heart of almost every big m and

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Speaker 4: a deal in this sector going forward.

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Speaker 2: Okay, Clara for our Marcus Managing editor for Commodities and

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Speaker 2: Energy in Asia, thanks so much for joining us this

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Speaker 2: morning and talking us through all the complicated aspect of

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Speaker 2: that deal falling apart. Well, let's turn to a different

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Speaker 2: story now here in the UK. When Charlie Mullens sold

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Speaker 2: Pimlico Plumbers to Neighborly in twenty twenty one, he became

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Speaker 2: the latestness string of entrepreneurs to sell their home or

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Speaker 2: their plumbing or home services firms to private equity. The

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Speaker 2: pe firms have bought thousands of small outfits across the

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Speaker 2: US thirty one billion dollars of deals since twenty fourteen.

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Speaker 2: But Mullins, who himself has a device divisive character, now

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Speaker 2: regrets his decision. He thinks the new owners have destroyed

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Speaker 2: Pimlico Plumbers, focusing on cost cutting and profits instead of customers,

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Speaker 2: and he's now setting up a new business called We Fix.

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Speaker 2: Our UK business reporter Sabah Mettings joins us now for

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Speaker 2: more on the story. Sabah, good morning. What has good

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Speaker 2: morning AKR, one of the biggest private equity firms in

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Speaker 2: the world got to do? Then, with the UK's richest plumber.

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Speaker 9: Well, like you saying, KKR, one of the world's biggest

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Speaker 9: private equity firms, has been plowing one hundreds of millions

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Speaker 9: into the plumbing industry. And Naborly, which is very many

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Speaker 9: across the US on a corporate level, but known for

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Speaker 9: owning lots of smaller plumbing brands across the US, has

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Speaker 9: a UK presence. And yeah, in twenty twenty one decided

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Speaker 9: to buy Pimlico Plumbers, which had been founded by Charlie Mullins,

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Speaker 9: who is quite the character, forty years ago and he

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Speaker 9: made one hundred and forty million pounds selling out the business.

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Speaker 9: And yeah, as you say, he's now turning around and saying,

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Speaker 9: perhaps it wasn't such a good idea now, As.

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Speaker 2: You mentioned Charlie Mullins using that wonderful euphemism. Quite the character,

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Speaker 2: very well known for his views on a whole variety

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Speaker 2: of subjects in the UK. Pimlico though a very recognizable

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Speaker 2: brand across London too.

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Speaker 9: Why so, well, I mean he might have spotted the

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Speaker 9: vans if you've been around London. They've all got these

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Speaker 9: personalized number plates, things like bog Wan Drain. I think

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Speaker 9: one of the first ones were, so that sort of

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Speaker 9: does like to have a bit of fun with it.

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Speaker 9: But yeah, there's the blue vans across London, all the

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Speaker 9: plum as. His kind of mission when he set up

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Speaker 9: the business that they would all be smart, they're all

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Speaker 9: in uniform and also clearly charging slightly more than all

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Speaker 9: the competitors.

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Speaker 3: Yeah, what is it.

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Speaker 2: Then about these sorts of businesses that private equity firms

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Speaker 2: find so appealing?

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Speaker 9: If you think about the plumbing industry, it's kind of

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Speaker 9: set up by largely entrepreneurs. They might be sole traders,

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Speaker 9: and then perhaps some of them will be slightly larger

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Speaker 9: businesses led by families. They've got great brand value, loyal

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Speaker 9: customers if they have a good experience. So, if you

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Speaker 9: want to enter the home services market, which as we

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Speaker 9: know how expensive, getting a plumber at short notices can

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Speaker 9: be quite profitable, what better way to enter with a

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Speaker 9: already you know, an established brand. And at the same

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Speaker 9: time it is a growing industry. I mean there's been

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Speaker 9: sort of millennials entering the home ownership. During the pandemic,

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Speaker 9: people were spending money on their houses as well, so

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Speaker 9: it has been a really hot area for private equity

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Speaker 9: to get into.

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Speaker 2: Charlie wellens he thinks the sale was a mistake of

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Speaker 2: Pimlico Plumbers.

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Speaker 3: Why is that well, he says.

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Speaker 9: That they're running at the American way and that's not

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Speaker 9: the way that you should run a British company. He

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Speaker 9: says that there's less personalization now, you know, people are

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Speaker 9: not getting their favorite plumber anymore because perhaps they're not

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Speaker 9: haven't got the same experienced staff that they had. He

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Speaker 9: also says he's heard from customers her complaining about the

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Speaker 9: customer experience. But we should say that there's a huge

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Speaker 9: amount of self interest here because mullins is non compete

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Speaker 9: deal runs out in September and he is starting again

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Speaker 9: with a direct competitor to Pimlico. But you know, if

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Speaker 9: we take his word for it, he believes that kicking

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Speaker 9: our neighborly is not running the business the way it

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Speaker 9: should be.

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