BHP’s second tilt at buying fellow mining giant Anglo American failed after the target rejected a $64.4 billion takeover offer.

The bid was more than $4 billion more than what BHP initially proposed in April, which was also rejected by the British mining company on the grounds that it “significantly undervalues” Anglo American.

BHP – which last year acquired Adelaide mining company OZ Minerals for $9.6 billion – told shareholders this morning that it made a revised proposal to Anglo American’s board of directors on 7 May, and that the improved offer was rejected yesterday.

“BHP is disappointed that the Anglo American Board has chosen not to engage with BHP with respect to the Revised Proposal and the improved terms,” it said.

“BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders.”

Under the terms of the revised proposal, the bid would have given Anglo American shareholders 0.8132 BHP shares for each ordinary share they owned in the British giant. In aggregate, approximately 16.6 per cent of the combined group would have been owned by Anglo American shareholders.

BHP CEO Mike Henry said the company was “disappointed that this second proposal has been rejected”.

“BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses,” he said.

“The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets.

“The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American’s portfolios.”

In a statement to the London Stock Exchange, Anglo American said it had a problem with the structure of the offer put forward by BHP, noting it was “unchanged from the proposal previously rejected”.

“The board has considered the latest proposal with its advisers and concluded that it continues to significantly undervalue Anglo American and its future prospects,” it said.

“Aside from significantly undervaluing Anglo American, the latest proposal continues to contemplate a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent, and significant execution risks.”

Under BHP’s offer, Anglo American would have to demerge two of its businesses – Anglo Platinum and Kumba – which the target said would have created “significant uncertainty, which falls disproportionately to Anglo American shareholders”.

“The Anglo American Platinum Limited and Kumba Iron Ore Limited shareholdings, at current market value, are worth approximately $15 billion and 34 per cent of the proposed total consideration,” Anglo American said.

“This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum Limited and Kumba Iron Ore Limited.

“This creates significant uncertainty as to the delivered value as part of the proposal.”

The demerger component would also “result in additional approvals”,  the company said.

“The timetable to obtain these additional approvals is expected to be lengthy. Some of these approvals may result in potential conditions being attached to the approvals, which could disproportionately impact Anglo American Platinum Limited and Kumba Iron Ore Limited and are not addressed in the Latest Proposal.

“Accordingly, the Board of Anglo American has unanimously rejected the Latest Proposal.

“The Board is confident in Anglo American’s standalone future prospects. Anglo American has accelerated plans for delivery of its standalone strategy and will provide a detailed investor update on 14 May 2024.”