BHP’s £39bn pursuit of Anglo American collapses

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 crucial 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 closed at £24.58, down 4 per cent on the day, in London.

Anglo said 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 imposed when control of the companies changed.

BHP dismissed those fears 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 elections, adding an extra layer of political complexity.

Reached by phone on Wednesday afternoon, Gwede Mantashe, South Africa’s influential minerals minister and a 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 demands of the times,” he said, in a reference to Anglo’s alternative plan to break up the London-listed miner.

The last-ditch request by BHP for an extension came as Henry met shareholders in London in an effort to canvass support. Many large asset managers, such as BlackRock, hold shares in both companies.

In rejecting BHP’s request Anglo’s board said it had held “extensive engagement” with its shareholders before “unanimously” concluding there was “no basis for a further extension”.

Anglo’s chief executive Duncan Wanblad must now show those shareholders he can execute his own restructuring, revealed last month in response to BHP’s approach.

Under these proposals, Anglo will demerge Amplats and sell other businesses including its trophy diamond brand De Beers in order to focus on copper, iron ore and fertiliser.

“BHP doesn’t want to launch a hostile offer, but this still leaves Anglo under huge pressure to deliver,” said Ian Woodley, an analyst at Old Mutual Investments, which owns about 2 per cent of Anglo.

In a final statement, Anglo noted BHP’s decision to walk away and said the company would focus on executing its restructuring plans “at pace”.

Additional reporting by Lukanyo Mnyanda and Arash Massoudi in London and Rob Rose in Johannesburg