Anglo rejects BHP's last-ditch attempt to continue takeover talks


May 29, 2024

 Anglo American on Wednesday rejected BHP Group's last-ditch request for more time to discuss a $49 billion takeover offer, dismissing it as highly complex and likely ending a five-week pursuit by the bigger rival.

Anglo had granted BHP a one-week extension until 1600 GMT on Wednesday to its original May 22 deadline to submit a binding offer, after rejecting a third takeover proposal that it dismissed as difficult to execute.

BHP still has until then to make a firm offer or walk away. It declined immediate comment, but has previously indicated it would not make a hostile bid.

BHP's shares closed flat on Wednesday at A$45.08. Anglo's were down 1.9 percent to 25.09 pounds at 1145 GMT.

London-listed Anglo agreed to hold talks with BHP to try to iron out concerns over the structure of the proposed deal, namely its condition that Anglo unbundle its South African platinum and iron ore units before the takeover.

In an earlier statement, BHP said it needed more time to engage with Anglo, while outlining commitments to minimise regulatory risk in South Africa and saying it would offer a break fee if the deal failed to gain regulatory approvals.

Those commitments included job security for employees in South Africa. BHP also said it would shoulder the costs of increased South African employee ownership that is expected to be required in any demerger.

But Anglo said those commitments were not enough.

"BHP continues to restate its belief that the risks of its complex structure are not material, yet has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks," Anglo said in its statement.

Anglo was founded in Johannesburg in 1917 and employs more than 40,000 South Africans, so any withdrawal would be a further economic blow to the country whose miners have been cutting jobs and investment as platinum especially falls out of favour.

South Africans are voting in an election on Wednesday, with polls suggesting the African National Congress could lose its majority after 30 years in power, in part due to anger about high unemployment and a stagnant economy.

JP Morgan analysts have estimated a takeover of Anglo by BHP could lead to outflows of $4.3 billion from South Africa and weaken the rand.

"Today's announcement says to me that BHP are doing all they can to placate any concerns Anglo's board could have from a South Africa jobs, and regulatory point of view," said analyst Hayden Bairstow of broker Argonaut in Perth about BHP's request for more time.

However, a source close to Anglo's thinking said its investors shared its reservations about BHP's proposal.

"The majority of the Anglo shareholders fully understand the concerns that are being expressed and I don't believe that they feel that the risks in the structure and the price are fully taken into consideration by BHP," the source said.

BHP's latest proposal values Anglo at 29.34 pounds per share or 38.6 billion pounds ($49 billion). Buying Anglo would strengthen BHP's position in copper and other metals central to the world's clean energy shift.

Anglo, meanwhile, has outlined its own plan to divest less profitable assets and focus on expanding copper output.

"I'm not surprised it was rejected really by Anglo ... because there wasn't really a lot in the statement from BHP ... it didn't seem that compelling," said George Cheveley, portfolio manager at Ninety-One, which holds a stake of about 2% in Anglo.

"If BHP walk away, Anglo have a plan - are they allowed to do that? That's the question really, or does somebody else come in?"

Anglo is attractive to its competitors for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of artificial intelligence.

One person familiar with the situation said it was virtually impossible for BHP to put in an offer by Wednesday's deadline and Anglo's statement could effectively have killed the deal.


Photo: Anglo American control center. Credit: Anglo American 

(Reporting by Clara Denina in London, Felix Njini in Johannesburg, Melanie Burton in Melbourne and Scott Murdoch in Sydney; Additional reporting by Amy-Jo Crowley, Sameer Manekar; Editing by Christopher Cushing and Mark Potter)



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