Business Maverick


BHP makes revised pitch to Anglo and gets rebuffed again

BHP makes revised pitch to Anglo and gets rebuffed again
(Photo: Reuters / Dado Ruvic / Illustration / File Photo)

BHP said on Monday it had raised its all-share offer for Anglo American and that the revised proposal was rejected. Anglo retorted that, in its view, the proposal undervalues its worth and the precondition of hiving off Amplats and Kumba creates complexity and uncertainty.

BHP, the world’s largest mining company, has been jilted again in its second revised bid to woo the board of Anglo American with its acquisition proposal. 

“BHP is disappointed that the Anglo American board has chosen not to engage with BHP,” BHP said on Monday. 

The revised proposal represents a 15% increase in the merger exchange ratio. BHP CEO Mike Henry said in a statement this would raise the stake for Anglo shareholders in the merged group to 16.6% from 14.8% in the original proposal.

Amplats and Kumba Iron Ore remain off the menu, with the transaction still hinging on their demerger before it goes ahead.

Anglo put out a statement later explaining why its board had rejected the second offer on Monday, six days after it was made. 

“The Board has considered the latest proposal with its advisers and concluded that it continues to significantly undervalue Anglo American and its future prospects. In addition, the Board has also taken into account the detailed feedback from its extensive engagement with Anglo American’s shareholders and stakeholders since the approach from BHP became public on 24 April 2024,” 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… The requirement to pursue two contemporaneous demergers creates significant uncertainty, which falls disproportionately to Anglo American shareholders.”

Anglo’s attraction to BHP lies in its extensive copper assets in South America. It’s apparent that it is not remotely interested in its South African platinum and iron ore operations. 

“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. 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,” BHP’s Henry said. 

“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.”  

Copper is seen vital to the green energy transition and for more old- fashioned uses as global urbanisation continues apace. Both Anglo and BHP see value in this state of affairs, but Henry’s implication is that if the two tango in that space this value will be uncorked from potential bottlenecks. 

BHP executives were recently in South Africa on a charm offensive to woo domestic investors and regulators.

Minerals and Energy Minister Gwede Mantashe, among others, has expressed his opposition to BHP’s hunt for Anglo, but there may not be much that he can do to ultimately stop it if the wheel keeps turning.

MiningMX quoted an unnamed source as saying BHP could walk away from the transaction as it is “not a must-do”, an indication that it may not try a third time.

If the more than $40-billion transaction does eventually go through it will be the biggest mining deal in a decade.

BHP has said the exclusion of most of Anglo’s South African assets is not a reflection of concerns about the domestic investment environment and is based on its preferred portfolio.

There have also been reports that Glencore may also make a move for Anglo. This has sparked speculation about a bidding war for the more than century-old company that has played a key role on the turbulent stage of South African history. 

This saga may just be starting to heat up as winter descends in these parts. DM


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted