“BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected,” Henry said.
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“BHP is disappointed that the Anglo American Board has chosen not to engage with BHP with respect to the revised proposal and the improved terms.”
The Australian miner said it had sweetened the terms of its bid on May 7, just two weeks shy of its initial offer becoming public.
Its new offer would increase Anglo American shareholders’ ownership of the combined post-merger group to 16.6 per cent, up from the first offer’s figure of 14.8 per cent.
BHP is proposing to give 0.8132 BHP shares for each ordinary share in Anglo American, valuing the London-listed company at about $64 billion.
It also wants to spin off Anglo’s Kumba Iron Ore and Anglo American Platinum business before merging the two companies. The demerger would mean Anglo gives all its holdings in the two companies to its existing shareholders before the businesses are combined, shielding BHP from two potentially tricky operations.
Anglo American’s poor financial condition combined with its high-quality assets has put a spotlight on its back.Credit: Bloomberg
Platinum is used in catalytic converters for internal combustion engines and faces uncertainty from the onslaught of electric vehicles and Anglo’s iron ore business in South Africa is plagued by unstable transport and energy networks.
In an attempt to soften investor opposition, BHP said it would assume the liabilities and other transaction-related costs associated with demerging the businesses, a key concern for Anglo’s shareholders.
Anglo’s curt dismissal of BHP’s second proposal echoes a similarly quick rejection of BHP’s initial offer as “opportunistic”. It valued the London-headquartered company at about $60 billion.
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Anglo’s board said BHP’s latest proposal “continues to significantly undervalue Anglo American and its future prospects”.
The London-based miner’s poor financial condition combined with its high-quality assets have put a spotlight on its back, attracting big global miners wanting to expand and capture key commodities.
Anglo recently embarked on a major cost-cutting drive after its share price slumped.
BHP last year swallowed Oz Minerals in a $9.6 billion acquisition. Rio Tinto had considered making an offer for Anglo, the Australian Financial Review has reported, and Glencore is also in the wings, although Switzerland-based resources group is still digesting its $US6.9 billion acquisition of Teck Resources’ met coal assets.
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Anglo’s sprawling global portfolio ranges from coal to copper, diamonds and platinum mines.
RBC Capital Markets analysts, led by Kaan Peker, estimate BHP’s initial proposal will create between $US4.1 billion to $US6.8 billion in synergies for the merged company.
The Australian miner’s revised offer equates to around £27.53 ($52.35) per Anglo American share, but RBC says the takeover value for the company may be as much as £31 per share.
“The top end of our synergy estimates would justify an offer greater than £30 per share. Obviously, BHP would be taking on significant project execution risk and copper price risk, under this scenario,” they said.
BHP and Anglo American were a strategic fit, Henry said. Combining them would create a “unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world-class businesses”, he said.
The bid is non-binding and subject to due diligence by BHP. Anglo has been offered reciprocal due diligence, the Australian miner said.
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