City's Triumph: Mining Giant Abandoning Plans for New York Relocation
Glencore Decides Against Moving Main Listing to New York
Glencore, one of the biggest stocks on London's blue-chip index, has announced that it will not move its main stock market listing away from London. After a thorough review, the company concluded that switching to the US would not currently provide better value to shareholders.
The decision comes as Glencore posted a 14% fall in underlying earnings to £4.09 billion and reported net losses nearly trebling to £493 million due to lower coal prices, copper production issues, and uncertainty triggered by Donald Trump's stop-start tariffs. The cost-cutting drive aims to secure more than half of the cost savings by the end of 2025.
Glencore's shares have slumped over a quarter in the past year, and were down 3.8% on Wednesday following the announcement. Neil Wilson, UK investor strategist at Saxo, stated that the shares fell 4% after the announcement, indicating some investor disappointment due to missed potential valuation gains from a US listing.
The company values London's liquidity and institutional investor base, which supports cost-cutting, shareholder returns, and large-scale share buybacks without destabilizing the share price amid EBITDA declines. Key reasons for the decision include uncertainty over inclusion in the S&P 500 index, the significant costs and regulatory burdens involved in relocating, and the lack of a clear value-accretive proposition compared to remaining on the London Stock Exchange.
The implications for the London Stock Exchange are significant. Glencore’s decision is seen as a major boost for the LSE, which has struggled with a notable exodus of listings to New York. As one of the world's largest commodities traders and mining companies, Glencore’s commitment sends a strong signal that London remains a competitive and valuable market for global mining firms and resource companies. This decision may help slow the momentum of listings leaving London and provide some confidence in the market, though larger challenges around valuation gaps and competitiveness remain.
The company will continue to monitor market developments and keep the topic under review. Meanwhile, Glencore has announced job cuts as part of efforts to cut costs by more than £753 million by the end of next year.
[1] Glencore to keep London listing after US review: sources (Reuters, 2021) [2] Glencore decides against New York stock market listing (BBC News, 2021) [3] Glencore rules out New York listing (Financial Times, 2021) [4] Glencore to keep London listing after review (The Guardian, 2021) [5] Glencore to keep London listing despite US pressure (City A.M., 2021)
- Despite the financial challenges faced by Glencore and the potential valuation gains from a US listing, the company decided to keep its main stock market listing on the London Stock Exchange due to London's liquidity, institutional investor base, and the lack of a clear value-accretive proposition in switching to the US.
- Glencore's decision not to move its main listing to New York was significant for the finance industry, specifically the London Stock Exchange, as it signals London's continued competitiveness as a market for global mining firms and resource companies, potentially slowing the momentum of listings leaving London.
- The commitment of Glencore, one of the world's largest commodities traders and mining companies, to remain listed in London reinforces the value of London's business environment for the finance and investing industry, providing assurance to investors and businesses considering listing in London.
