Anglo American rejects new $43 billion takeover offer from BHP

Anglo American rejects new $43 billion takeover offer from BHP
Anglo American rejects new $43 billion takeover offer from BHP

(Ecofin Agency) – At the end of April, Anglo American refused a first takeover proposal valuing the company at $39 billion. BHP is trying to take control of its rival in order to access the latter’s large copper portfolio, but is demanding the sale of iron and platinum mines before any merger.

The Anglo-Australian mining giant BHP has suffered a new setback in its attempt to take control of Anglo American. The company founded in South Africa more than a century ago announced on Monday May 13 that it would reject the new offer of 34 billion pounds sterling ($42.7 billion) sent a week ago by BHP.

The new proposal made to Anglo American nevertheless represents an improvement of 10% compared to the initial proposal of 39 billion dollars. It would also have allowed current Anglo American shareholders to hold 16.6% of the merged group, compared to 14.8% in the previous proposal. Anglo American’s Board of Directors nevertheless refused the offer, still deeming this potential merger ” very unattractive » for shareholders.

BHP’s latest proposal still fails to recognize the inherent value of Anglo American. Anglo American, its shareholders and stakeholders are therefore disproportionately exposed to the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover. “, said Stuart Chambers, chairman of the London-based mining giant.

As a reminder, BHP’s offer is in fact subject to various conditions, in particular that of the splitting of the Anglo American subsidiaries active in the exploitation of iron and platinum group metals in South Africa before the merger. While this possibility has already raised an outcry within the South African government and among local unions, the Anglo American Board of Directors also seems to be opposed to it for the moment.

Beyond the rejection of BHP’s offer, let us note that the management of Anglo American is especially expected by investors on a proposal which would make it possible to escape this takeover by its biggest rival. The mining giant has been carrying out a strategic review of its portfolio since mid-2023 and could present the results of this work as early as Tuesday, May 14 as well as a plan that would generate more value for shareholders than through the transaction. proposed by BHP.

Apart from South African platinum and iron ore mines, Anglo American mines diamonds through the De Beers group, as well as copper. The latter product is the fundamental reason for BHP’s takeover offer, as the acquisition of Anglo American would give the Anglo-Australian giant control of four of the world’s largest copper mines. While global demand for copper is expected to explode with the energy transition and prices are currently flirting with the $10,000 per tonne mark, BHP hopes to strengthen its control over the red metal.

Emiliano Tossou

Also read:

04/26/2024 – Anglo American rejects BHP’s $39 billion takeover offer deemed “very unattractive”

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