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BlackRock Urges Anglo to Extend BHP Merger Talks

Shareholders Support Continuing Negotiations Despite Concerns Over Deal Structure

by Adenike Adeodun

Anglo American has been urged by significant shareholders, including BlackRock, to continue discussions with BHP Group regarding a proposed £38.6 billion ($49.18 billion) mining merger, according to a source familiar with the matter. This encouragement comes as BHP, the world’s largest publicly traded mining company, faces a deadline to make a firm offer by May 29 or walk away for six months under UK takeover rules.

BlackRock, a major stakeholder with a 9.6% ownership in Anglo, was among the key investors advocating for ongoing negotiations, as first reported by the Financial Times. Other notable shareholders, Ninety One and Sanlam Investments, also supported extending the talks despite reservations about a deal structure necessitating Anglo to divest its interests in its South African platinum and iron-ore units.

The Financial Times highlighted that the support from BlackRock and other investors comes with concerns about the proposed deal’s structure. Ninety One and Sanlam Investments, though supportive, have not publicly commented on the situation. BlackRock, which also holds shares in BHP, has been a pivotal voice in pushing for further dialogue between the two mining giants.

According to Reuters, BHP intends to stand firm on the structure and valuation of its latest takeover bid. The focus over the next week will be on addressing Anglo’s concerns regarding the risks associated with executing the merger. Sources familiar with BHP’s strategy have indicated that there may be room for “smaller, creative structures to better share the risks,” although major changes to the deal are unlikely.

Despite the ongoing discussions and encouragement from shareholders, Anglo American has maintained its stance on needing alterations to the proposed structure or an increase in BHP’s offer. The firm has not officially commented on the reports by the Financial Times. Similarly, BHP Group and BlackRock have remained silent on the latest developments.

The potential merger between Anglo American and BHP Group represents a significant move in the global mining industry. The deal, if successful, would combine two of the world’s leading mining companies, potentially reshaping the sector’s competitive landscape. However, the complex nature of the merger, particularly regarding the divestment of Anglo’s South African assets, has been a sticking point in negotiations.

The UK’s takeover rules have added pressure to the situation, giving BHP a limited window to finalize its bid. The one-week extension granted last Wednesday has provided additional time for both parties to address outstanding concerns and attempt to reach a mutually agreeable deal.

For Anglo American, the merger with BHP presents both opportunities and challenges. While the deal could enhance its global standing and operational capabilities, the required divestment of key South African assets poses significant strategic and financial considerations. These factors have contributed to the cautious approach taken by Anglo’s management and shareholders.

On the other hand, BHP’s interest in merging with Anglo American underscores its ambition to consolidate its position as the world’s leading mining company. The merger could offer substantial synergies and growth potential, but it also involves navigating complex regulatory and operational hurdles.

As the deadline approaches, the mining industry is closely watching the developments between Anglo American and BHP. The outcome of these negotiations will have far-reaching implications for the companies involved and the broader mining sector.

BlackRock’s push for continued talks between Anglo American and BHP highlights the significant shareholder interest in pursuing a potential merger. While key investors support the negotiations, concerns about the deal’s structure and the divestment of South African assets remain central issues to be resolved. With the deadline looming, the next few days will be critical in determining whether the two mining giants can reach an agreement that satisfies both parties and their shareholders.


Source: Mining Weekly

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