BHP abandons its offer for Anglo American

BHP abandons its offer for Anglo American
BHP abandons its offer for Anglo American

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BHP bid difficult to execute, erodes value – Anglo

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BHP does not obtain deadline from Anglo

(Updated with BHP decision, details)

by Melanie Burton

LONDON/JOHANNESBURG/MELBOURNE, May 29 (Reuters) –

Mining giant BHP Group on Wednesday abandoned its $49 billion (€45.19 billion) acquisition offer for Anglo American, after the latter rejected a request to extend the deadline to discuss the project.

Anglo had granted BHP a one-week extension, until 16:00 GMT on Wednesday, of its initial deadline to submit a binding offer, after rejecting a third takeover proposal that it considered difficult to execute.

“While we are convinced that our offer for Anglo American represents a unique opportunity to effectively increase value for both groups of shareholders, we have been unable to agree on the risks and costs associated with South African regulations,” BHP said in a statement.

“We remain convinced that our proposal represented the most effective structure to create value for Anglo American shareholders, and we are confident that, working together, we could have obtained all necessary regulatory approvals, including in Africa of the South,” he added.

Anglo American said after BHP’s statement that it was fully focused on implementing its own plans to increase shareholder value.

Anglo shares closed down 3% on Wednesday on the London Stock Exchange.

Anglo had agreed to negotiate with BHP to try to allay concerns over the structure of the proposed deal, including the condition placed on Anglo to unbundle its South African platinum and iron ore production units before the takeover.

JOB GUARANTEES IN SOUTH AFRICA

In a previous statement, BHP said it needed more time to engage with Anglo, while providing assurances to minimize regulatory risks in South Africa.

These commitments included job security for employees in South Africa.

Anglo, however, considered these measures insufficient.

“BHP continues to reaffirm its belief that the risks associated with its complex structure are not material, despite having repeatedly and consistently stated, both publicly and during discussions, that it is not prepared to to modify the structure it proposed to assume these risks,” Anglo said in a statement.

A withdrawal of Anglo, founded in Johannesburg in 1917, would have dealt a new blow to the economy of South Africa, where it employs 40,000 people, while mining groups have already eliminated jobs and investments in the face of to the decline in demand for platinum.

Analysts at JP Morgan estimated that a BHP takeover of Anglo could trigger an outflow of $4.3 billion from South Africa and weaken the rand.

Under BHP’s latest proposal, Anglo would have been valued at 29.34 pounds per share, or 38.6 billion pounds.

“I’m not surprised that (this proposal) was rejected by Anglo because there wasn’t much in the BHP statement. It didn’t seem that convincing,” said George Cheveley, portfolio manager at Ninety -One.

Anglo American is attracting attention because of its copper assets in Chile and Peru. Copper, used in electric vehicles and construction, as well as in electricity networks, is expected to see its demand increase thanks to the emergence of green energy and artificial intelligence. (Reporting by Melanie Burton in Melbourne and Scott Murdoch in Sydney, with contributions from Clara Denina in London, Felix Njini in Johannesburg and Sameer Manekar in Bangalore; French version Dagmarah Mackos and Camille Raynaud, editing by Kate Entringer and Bertrand Boucey)

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