Big buck sweetener not enough for final BHP takeover offer
An offer of an extra $10 billion was not enough to get a third and final bid from BHP over the line for British miner Anglo American, which said it still had problems with the deal’s structure.
BHP chair Ken MacKenzie. Photo: Tony Lewis/InDaily
London Stock Exchange-listed mining company Anglo American has rejected a takeover offer valuing it at $74 billion from Australian copper giant BHP – its third offer in the space of a month.
The bid – worth $10 billion more than BHP’s previous tilt for Anglo American – would have given Anglo American shareholders a 47 per cent premium on the value of the company’s shares just prior to BHP’s first $60 billion bid in late April.
It also would have required Anglo American to demerge two South African businesses: Anglo Platinum and iron ore miner Kumba. This structure was a sticking point for the target following BHP’s two previous bids and remained an issue for the British mining company following the third sweetened offer.
“The Board continues to believe that there are serious concerns with the structure given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American’s shareholders,” Anglo American said.
“The requirement to pursue two contemporaneous demergers of publicly listed companies alongside a takeover and the inter-conditional nature of the three transactions is unprecedented, and as a result of a takeover would result in additional material approvals and conditions, particularly in South Africa.
“BHP’s latest proposal is therefore in clear contrast to Anglo American’s simpler standalone plan to accelerate value delivery announced on 14 May 2024 and its proposal to demerge Anglo American Platinum Limited – a single demerger that Anglo American has a proven track record in delivering.”
Anglo American added that BHP’s proposed takeover structure would take 18 or more months to complete, and carried “significant execution and completion risks”. As such, the board has unanimously rejected the third bid.
“The board is confident in Anglo American’s standalone future prospects and believes that Anglo American has set out a clear pathway and timeframe to deliver the acceleration of its strategy to unlock significant and undiluted value for Anglo American’s shareholders,” Anglo American chairman Stuart Chambers said.
“The board considered BHP’s latest proposal carefully, concluded it does not meet expectations of value delivered to Anglo American’s shareholders, and has unanimously rejected it.
“In particular, it does not address the board’s concerns about the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American’s shareholders. Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues.”
Chambers added that the board was willing to “continue to engage with BHP and its advisers on this topic”.
BHP put its latest offer to Anglo American on Monday, the company said, noting a combined BHP and Anglo American would have a “leading portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore and metallurgical coal and future facing commodities, including potash and copper”.
For BHP, the deal follows a $9.6 billion takeover of Adelaide mining company OZ Minerals.
Shares in BHP are down 3.55 per cent in early trade today.
