BHP’s £39bn hunt for Anglo-Americans is collapsing

Unlock the Editor’s Digest for free

BHP’s £39 billion takeover bid for Anglo American has collapsed after a frenzied six-week chase.

In a final day of default, BHP called for an extension of talks, which Anglo rejected, before the Australian mining company ultimately abandoned its takeover attempt minutes before a British deadline to make a binding offer or walk away.

“While we believed that our proposal for Anglo American was an attractive opportunity to effectively grow the value pie for both sets of shareholders, we were unable to reach an agreement,” BHP Chief Executive Mike Henry said in a statement on Wednesday.

Henry had his sights set on Anglo’s prized copper business, which was expected to boom given the metal’s key role in the energy transition, but had no interest in acquiring Anglo American Platinum and Kumba Iron Ore operations in South Africa .

The proposed deal required Anglo to first spin off the two companies and was ultimately deemed too risky by Anglo’s board of directors, which said on Wednesday the offer remained “very complex and unattractive.”

Although differences over price have narrowed in the past month after BHP sweetened its all-share offer three times, the two companies have always remained at odds over the structure of the deal.

Shares in Anglo closed at £24.58 in London, down 4 per cent on the day.

Anglo said making the takeover conditional on the demerger of Kumba Iron Ore and Anglo American Platinum, a major employer in South Africa, would expose shareholders to any conditions Pretoria might have imposed when control of the companies changed.

BHP dismissed these fears earlier on Wednesday, saying the risks of its plan were “quantifiable and manageable” and that Anglo had overestimated any costs to shareholders. “BHP is confident that the measures it has proposed to the Anglo American board provide a viable path forward to resolve the matters raised by Anglo American and will support the South African regulatory approvals,” the report said .

Anglo’s chosen deadline of Wednesday to make a firm offer or walk away coincided with South Africa’s national elections, adding another layer of political complexity.

Reached by phone on Wednesday afternoon, Gwede Mantashe, South Africa’s influential minerals minister and a close ally of President Cyril Ramaphosa, said he agreed with Anglo’s decision to end its partnership with BHP. “They must now restructure and respond to the demands of the times,” he said, referring to Anglo’s alternative plan to break up the London-listed miner.

BHP’s last-ditch request for an extension came as Henry met shareholders in London in an attempt to drum up support. Many major asset managers, such as BlackRock, own shares in both companies.

In rejecting BHP’s request, Anglo’s board said it had conducted “extensive consultations” with its shareholders before “unanimously” concluding that there was “no basis for a further extension”.

Anglo’s CEO Duncan Wanblad must now show shareholders he can carry out his own restructuring, as was revealed last month in response to BHP’s approach.

Under these proposals, Anglo will spin off Amplats and sell other businesses, including the De Beers diamond brand, to focus on copper, iron ore and fertilizers.

“BHP does not want to make a hostile bid, but this still puts a lot of pressure on Anglo to deliver,” said Ian Woodley, an analyst at Old Mutual Investments, which owns about 2 percent of Anglo.

In a closing statement, Anglo noted BHP’s decision to walk away and said the company would focus on executing its restructuring plans “at pace”.

Additional reporting by Lukanyo Mnyanda and Arash Massoudi in London and Rob Rose in Johannesburg

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top