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BHP’s £39bn pursuit of Anglo American collapses
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BHP’s £39 billion takeover bid for Anglo American collapsed after a frantic six-week chase.
On a last day of daring, BHP called for an extension of talks, which Anglo rejected, before the Australian miner finally abandoned its takeover attempt minutes before a UK deadline to make a binding offer or walk away.
“Although we believed that our proposal for Anglo-American was an attractive opportunity to effectively grow the value pie for both groups of shareholders, we were unable to reach an agreement,” BHP chief executive Mike Henry said in a statement on Wednesday.
Henry had his eye on Anglo’s valuable copper business, expected to grow given the metal’s crucial role in the energy transition, but had no interest in acquiring Anglo’s Anglo American Platinum and Kumba Iron Ore operations, based in South Africa.
The proposed deal required Anglo to first separate the two businesses and was ultimately deemed too risky by Anglo’s board, which said on Wednesday that the offer remained “highly complex and unattractive”.
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While disagreements over the price have eased over the past month after BHP reduced its offer to buy all the shares three times, the two companies have always remained at odds over the structure of the deal.
Anglo shares closed at £24.58, down 4% on the day, in London.
Anglo said that making the acquisition conditional on the spin-off of Kumba Iron Ore and Anglo American Platinum, a large employer in South Africait would leave its shareholders exposed to any conditions that Pretoria might have imposed when control of the companies changed.
BHP dismissed those fears on Wednesday, saying the risks of its plan were “quantifiable and manageable” and that Anglo had exaggerated any costs to shareholders. “BHP is confident that the measures it has proposed to the Anglo American board provide a viable path to resolve the issues raised by Anglo American and would support South African regulatory approvals,” it said.
BHP’s Wednesday deadline to make a firm offer or walk away, which was chosen by Anglo, coincided with South Africa’s national electionsadding an extra layer of political complexity.
Reached by phone on Wednesday afternoon, Gwede Mantashe, South Africa’s influential minerals minister and close ally of President Cyril Ramaphosa, said he agreed with Anglo’s decision to end its involvement with BHP. “They must now restructure themselves and respond to the demands of the times,” he said, in a reference to Anglo’s alternative plan to spin off the London-listed mining company.
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BHP’s latest request for an extension came as Henry met shareholders in London in an effort to drum up support. Many large asset managers, such as BlackRock, hold shares in both companies.
In rejecting BHP’s request, Anglo’s board said it maintained “extensive engagement” with its shareholders before concluding “unanimously” that there was “no basis for a further extension”.
Anglo chief executive Duncan Wanblad must now show shareholders he can execute his own restructuring, revealed last month in response to BHP’s approach.
Under these proposals, Anglo will spin off Amplats and sell other businesses, including its De Beers diamond brand, to focus on copper, iron ore and fertilizers.
“BHP does not want to launch a hostile bid, but this still leaves Anglo under enormous pressure to deliver,” said Ian Woodley, an analyst at Old Mutual Investments, which owns around 2% of Anglo.
In a final statement, Anglo referred to BHP’s decision to step aside and said the company would focus on executing its restructuring plans “at an accelerated pace”.
Additional reporting by Lukanyo Mnyanda and Arash Massoudi in London and Rob Rose in Johannesburg