Anglo American rejects proposed $39 billion takeover of BHP

Anglo American on Friday rejected a proposed £31.1 billion ($39 billion) takeover of rival mining firm BHP, saying the offer significantly undervalues ​​the London-listed miner and its future prospects.

“BHP’s proposal is opportunistic and does not enhance Anglo American’s prospects, significantly diluting the relative ownership of Anglo American shareholders compared to BHP shareholders,” Anglo chairman Stuart Chambers said in a statement.

Reuters reported on Thursday, citing two sources, that Anglo-Saxon management does not consider the proposal attractive as some investors and analysts consider it opportunistic.

BHP, the world’s largest listed mining company, on Thursday offered Anglo shareholders £25.08 a share, a 31% premium to Wednesday’s market close, sending shares of London-listed Anglo up by 16%.

A condition of its proposal is that Anglo first distribute to shareholders its stakes in Anglo American Platinum and Kumba Iron Ore, both of which operate in South Africa, where BHP has no assets.

On Friday, Anglo said the framework offered was “highly unattractive… given the uncertainty and complexity inherent in the proposal, and significant execution risks”.

BHP did not immediately comment on Anglo’s refusal. Anglo shares fell 0.6% in early trading.

BHP shares closed 4.6% lower in Australia on Friday. There was no trading in the company’s shares on Thursday as the Australian stock market was closed for a public holiday.

Questions about jurisdictional risks in South Africa and other regions and concerns that Anglo American’s business has a lower margin than BHP’s have led to a “fire sale” in shares, said Kaan Peker, an analyst at RBC Capital Markets in Sydney.

“I think this uncertainty results in a small reduction in what investors are willing to pay for future earnings,” Peker said.

Even some BHP investors are still not convinced of the deal’s validity.

“I’m a little surprised the deal isn’t done. This probably means BHP will have to offer more to win over shareholders and management and risks creating damaging animosity,” said Brenton Saunders, portfolio manager at Pendal.

“The deal is complicated as Anglo has a complicated structure with several moving parts such as AngloPlats, Kumba and De Beers. It is unclear how BHP will add value to the deal if it is required to offer much more.”

Consensus is growing that BHP will have to sweeten its offer to complete the deal. BHP has until May 22 to submit a binding offer.

A deal, if successful, would represent the world’s largest mining acquisition in 2024 and would be among the top 10 deals in the industry, according to LSEG data.

Attention is now turning to antitrust concerns, with industry sources citing regulators of BHP’s major customers, China for copper and Japan and India for coal for steelmaking, as potential obstacles to the agreement.

Source: Terra

Rose

Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.