Anglo-American remains unmoved by BHP’s renewed efforts, rejecting the latest proposal for a £34 billion ($42.7 billion) takeover. The decision, announced on May 13, 2024, throws a wrench into BHP’s plans to become a copper mining giant.
This marks the second time Anglo American has rebuffed BHP’s advances. In April 2024, they rejected an initial all-share takeover offer valued at $39 billion.
Unattractive Terms and Unclear Path Forward
While BHP sweetened the pot with a 10% increase in the latest offer, Anglo American’s board of directors deemed it “highly unattractive” for their shareholders. Several key factors contributed to this decision.
Firstly, the revised bid hinged on Anglo-American selling off its iron ore and platinum assets in South Africa. The board expressed reservations about this requirement. Secondly, concerns lingered regarding the “uncertainty and complexity” associated with merging the two companies.
Analysts believe BHP’s primary motivation for the takeover is to solidify its position in the global copper market. Copper is a vital material for renewable energy technologies and electric vehicles, and demand is expected to surge in the coming years.
By acquiring Anglo American, BHP would gain ownership stakes in four of the world’s largest copper mines – Collahuasi, Los Bronces, El Soldado, and Quellaveco. This significant boost in copper production capacity would solidify BHP’s place as a major player in the industry.
BHP Expresses Disappointment, Seeks Binding Offer
BHP CEO Mike Henry expressed disappointment at Anglo American’s decision. However, he reiterated BHP’s belief that a combined entity would create substantial value for both sets of shareholders. BHP has until May 22, 2024, to submit a binding offer.
While BHP maneuvers to win over Anglo American’s board, the latter’s own shareholders have a different agenda. They are urging the company to prioritize the implementation of its turnaround plan, initiated in mid-2023.
This plan involves a comprehensive review of Anglo American’s global mining operations, with the goal of identifying areas for improvement and maximizing profitability. Investors are eager for a more concrete strategy from Anglo American, demonstrating how it can create value for them independently.
There’s speculation that Anglo-American may unveil its revised strategy this week at a major industry conference in Miami.
Market Reaction and Next Steps
Anglo-American’s share price dipped slightly following the news, while BHP’s share price experienced a modest gain. The future of the potential BHP-Anglo-American merger remains uncertain.
BHP may attempt to revise its offer again or walk away entirely. Meanwhile, Anglo American needs to appease its shareholders with a clear path forward, demonstrating its ability to thrive as a standalone company.
The coming days and weeks will be crucial for both mining giants as they determine their next steps in this high-stakes game for copper dominance.
Source: Mining.com
