Mining

Anglo rejects BHP bid

Anglo American’s board has rejected BHP’s bid for the company, saying the offer undervalues the miner and is unattractive to Anglo American’s shareholders.

This week, the world’s largest mining company, BHP Group, made a takeover approach for rival Anglo American, a move that could spark the biggest shakeup in the industry in over a decade.

Anglo American said late Wednesday, 24 April, that it had received an unsolicited all-share merger proposal after Bloomberg reported that BHP was considering a potential offer.

Anglo added BHP’s proposal was conditional on the company first splitting off its South African platinum and iron ore units.

If successful, the transaction would mark a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in the past couple of years under Chief Executive Officer Mike Henry.

It appears tailored to expand BHP’s copper footprint, highlighting how the red metal has become a priority for the mining sector, and the move could flush out other suitors aiming to do the same.

“If BHP does indeed continue to pursue this deal, we would be surprised if other bidders do not emerge,” analysts from Jefferies LLC, led by Christopher Lafemina, said in an emailed note. 

A bid that values Anglo at $42.6 billion – a 28% premium based on its latest share price – might get a deal “across the finish line,” they said.

However, in a SENS announcement released this morning, Anglo said the board has considered the proposal with its advisers and concluded that it significantly undervalues Anglo American and its future prospects.

“In addition, the proposal contemplates a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal and significant execution risks,” the miner said.

The proposal comprised an all-share offer for Anglo American by BHP, with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore to Anglo American shareholders. 

The all-share offer and required demergers would be inter-conditional.

“The board has therefore unanimously rejected the proposal.”

Anglo American chairman Stuart Chambers said Anglo American is well positioned to create significant value from its portfolio of high-quality assets that are well aligned with the energy transition and other major demand trends. 

“The BHP proposal is opportunistic and fails to value Anglo American’s prospects while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders,” he said. 

“Anglo American shareholders are advised to take no action in relation to the possible offer. A further announcement will be made as and when appropriate. There can be no certainty that any firm offer will be made.”

Under South Africa’s Takeover Code, BHP must, by no later than 17:00 on 22 May 2024, either announce a firm intention to make an offer for Anglo American or announce that it does not intend to make an offer.

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