Anglo American has extended the deadline for the BHP takeover after rejecting an improved offer

Unlock editor summary for free

Anglo American has extended talks with BHP over a takeover bid, keeping alive the prospect of the biggest deal in the mining sector even after the UK-listed group rejected a third approach worth £38.6bn.

BHP now has until 5pm UK time on May 29 to make a formal bid for its smaller rival after increasing the number of shares on offer to UK investors in its third and “final” deal offer.

Anglo will continue to work with BHP for another week, although it said it continued to have “serious concerns” about the complex structure of the deal, which requires the spin-off of two South African units.

The extension keeps alive BHP’s hopes that it can still secure a deal that will transform the global mining industry and give the Australian company access to more copper, a metal vital to decarbonisation.

BHP said in a separate statement on Wednesday that its third all-share offer valued Anglo at £31.11 a share based on the closing price on May 22 and that this represented its “final offer ratio”.

The statement added that under UK takeover rules, the bid could be increased under certain conditions, such as Anglo’s board agreeing to recommend a higher bid or a bid from a rival company for Anglo. However, BHP does not intend to improve the share offer or change the structure of the deal, according to people familiar with the company’s plans.

Anglo’s board unanimously rejected the third proposal. Chairman Stuart Chambers said the offer “does not meet expectations for value delivered to Anglo American shareholders” but that the board is “ready to continue to engage with BHP and its advisers on this topic”.

Ben Davies, a mining analyst at Liberum, said the late turnaround meant a deal was still possible, but Anglo’s resistance to spinning off its South African business first remained an issue. “Final offers are never final and the door is left open, but it is hard to see how to ‘safeguard’ BHP’s proposed structure,” he said.

Anglo said the latest offer valued its shares at £29.34, based on its closing share price on April 23, before news of the merger talks became public. BHP’s previous offer valued Anglo at £27.53 per share, or £34bn. It had originally offered £25 per share, or £31bn.

The deal will give Anglo shareholders a 17.8 percent stake in BHP and is a 47 percent premium to Anglo’s share price before news of the merger talks became public, according to BHP.

BHP chief executive Mike Henry said the company “looks forward to engaging with Anglo American’s board to explore this unique and compelling opportunity to bring together two highly complementary world-class businesses”.

News of BHP’s improved bid came hours after Public Investment Corporation, the South African state investor that is Anglo’s second-largest shareholder, said BHP needed to make a “significant revision” to its offer.

Anglo said in a statement: “The board continues to believe that there are serious concerns about the structure, given that it is likely to result in a material completion risk and value impact that falls disproportionately on Anglo American shareholders.”

Last week, Anglo unveiled plans for a dramatic turnaround to break up, spinning off its metallurgical coal, diamond and platinum divisions in a bid to fend off BHP.

BHP’s proposal to split the two units sparked controversy in South Africa during an election year as it was seen as BHP facing a vote of no confidence in the country.

Anglo shares were down 0.2% at £26.81 in afternoon trade in London.

Updated Anglo-American corporate structure

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top