Anglo American rejects Bhp 36 billion offer: ‘Unattractive’
Yesterday, the BHP group had started a £31.1 billion bid (equivalent to $38.8 billion) to acquire Anglo American, which plans a value of £25.08 per Anglo American share, including £4.86 in Anglo Platinum shares and £3.4 in Kumba Iron Ore shares. There is risk linked to raw materials essential for the ecological transition and the production of electric vehicles behind the record merger attempt in the mining sector.
Yet, the board of directors of the British mining giant unanimously rejected the offer in less than 24 hours, arguing that this “significantly underestimated Anglo American and its future prospects“. The structure of the deal was described by the board as “distinctly unattractive”.
If the merger had gone through, it would have been one of the largest transactions in the mining sector since the one between Glencore and Xstrata which took place over ten years ago. BHP had its eye on Anglo American’s global copper operations, with a particular interest in operations located in Chile and Peru.
Bhp’s offer was mainly based on Anglo American’s proposed separation of its platinum and iron ore operations in South Africa. Under the terms of the offer, Anglo American shareholders would receive 0.7097 BHP shares for each of their ordinary shares, together with shares in Anglo Platinum and Kumba, distributed in proportion to their stake in these companies.
At the time of writing, Anglo has advised shareholders to take no action in relation to the giant offering, which has the potential to fundamentally reshape the sector. “Bhp’s proposal it is opportunistic and does not enhance Anglo American’s prospectswhile it significantly dilutes the relative value of Anglo American shareholders’ ownership compared to those of BHP – said Stuart Chambers, chairman of Anglo – The proposed structure is also very unattractive and creates substantial uncertainty and execution risk for almost entirely of Anglo American, its shareholders and other stakeholders.”