BHP’s £39bn pursuit of Anglo American on brink of collapse

Financial Times

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BHP’s £39bn takeover bid for Anglo American has collapsed after a frenzied six-week pursuit.

In a last day of brinkmanship, BHP called for an extension to talks, which Anglo rebuffed, before the Australian mining company finally abandoned its takeover attempt minutes before a UK deadline to make a binding offer or walk away.

“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,” BHP chief executive Mike Henry said in a statement on Wednesday.

Henry had set his sights on Anglo’s prized copper business, expected to boom given the metal’s key role in the energy transition, but had no interest in acquiring Anglo’s South Africa-based Anglo American Platinum and Kumba Iron Ore operations.

The proposed deal required Anglo to first demerge the two businesses and was ultimately deemed too risky by Anglo’s board, which said on Wednesday that the offer remained “highly complex and unattractive”.

While disagreements over price have narrowed over the past month after BHP sweetened its all-share bid three times, the two companies always remained at loggerheads over the deal’s structure.

Shares in Anglo were down 1.2 per cent at £25.22.

Anglo argued that making the takeover conditional on demerging Kumba Iron Ore and Anglo American Platinum, a big employer in South Africa, would leave its shareholders exposed to any conditions Pretoria may have impose when control of the companies changed.

BHP dismissed those fears on earlier on Wednesday, saying the risks of its plan were “quantifiable and manageable” and that Anglo had overstated any cost to shareholders. “BHP is confident that the measures it has proposed to the board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals,” it said.

BHP’s Wednesday deadline to make a firm offer or walk away, which was selected by Anglo, coincided with South Africa’s national election, adding an extra layer of political complexity.

Reached by phone on Wednesday afternoon, Gwede Mantashe, South Africa’s influential minerals minister and close ally of president Cyril Ramaphosa, said he agreed with Anglo’s decision to end its engagement with BHP. “They must now restructure and respond to the demand of the times,” he said, in reference to Anglo’s alternative plan to

The full article is available here. This article was published at FT Markets.