Published: May 30, 2024 |

[Click image to enlarge]

[Click image to enlarge]

Mining group BHP Group on Wednesday walked away from its $49 billion plan to takeover rival Anglo American, which rejected a last-ditch request for more time, ending for now its six-week pursuit.

Anglo had granted BHP a one-week extension until 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.

“While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost,” BHP said in a statement.

“We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa,” the statement added.

“While we believe an acquisition of Anglo would be a longer term positive for BHP, the fact that BHP is being disciplined in its approach is a near-term positive for its shares,” said Jefferies analyst Christopher LaFemina.

“That said, we are surprised BHP did not have a plan to overcome the clear structural issues relating to this deal,” added LaFemina.

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 minimize 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 favor.

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.

BHP’s latest proposal valued 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 percent in Anglo.

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.

Source: Reuters

BHP is a leading global resources company. They extract and process minerals, oil and gas, with approximately 80,000 employees and contractors, primarily in Australia and the Americas. Their products are sold worldwide, with sales and marketing led through Singapore and Houston, United States. Their global headquarters are in Melbourne, Australia.

Anglo American is a leading global mining company and its products are the essential ingredients in almost every aspect of modern life. Their portfolio of world-class competitive operations, with a broad range of future development options, provides many of the future-enabling metals and minerals for a cleaner, greener, more sustainable world and that meet the fast growing every day demands of billions of consumers. With people at the heart of their business, they use innovative practices and the latest technologies to discover new resources and to mine, process, move, and market products to their customers — safely and sustainably. As a responsible producer of diamonds (through De Beers), copper, platinum group metals, premium quality iron ore and metallurgical coal for steelmaking, and nickel — with crop nutrients in development — they are committed to being carbon neutral across our operations by 2040. More broadly, their Sustainable Mining Plan commits them to a series of stretching goals to ensure they work towards a healthy environment, creating thriving communities, and building trust as a corporate leader. They work together with business partners and diverse stakeholders to unlock enduring value from precious natural resources for the benefit of the communities and countries in which they operate.

Be in-the-know when you’re on-the-go!