Australia’s BHP, which has until May 22 to submit a binding offer, is expected to improve its proposal to try to close a deal that would create the world’s largest copper miner.
Reuters.- Anglo American on Friday rejected competitor BHP Group’s proposed £31.1 billion ($38.88 billion) takeover, saying the offer significantly undervalued the London-listed miner and its future prospects.
Australia’s BHP, which has until May 22 to submit a binding offer, is expected to improve its proposal to try to close a deal that would create the world’s largest copper miner, a metal critical to the shift to clean energy. representing around 10% of world production.
Anglo shares in London were up 5.7% at 27.04 pounds at 1303 GMT. Activist fund Elliott has built a $1 billion position, according to a person with knowledge of the stake, boosting the stock.
Anglo said the complex structure of the deal created uncertainty and that it was well positioned to create significant value from assets aligned with the energy transition and other important demand trends.
The company began a strategic review of its assets in February, in response to a 94% drop in annual profits and a series of writedowns caused by lower demand for raw materials.
“BHP’s proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value of Anglo American shareholders’ holding relative to BHP shareholders,” said Anglo chairman Stuart Chambers. , it’s a statement.
Reuters had reported on Thursday, citing two sources, that Anglo’s management team did not consider the offer attractive, and analysts and investors projected on Friday that BHP would return with a larger proposal.
“Regarding price, I think it’s pretty clear that the initial trigger is just that,” said Todd Warren, portfolio manager at Tribeca Investment Partners in Sydney, which owns Anglo shares. “We would need to see more money on the table before selling our shares.”
BHP shares closed down 4.6% in Australia on Friday. The world’s largest listed miner offered Anglo shareholders 25.08 pounds ($31.39) on Thursday, a 31% premium over Wednesday’s close.
London copper prices hit a two-year high above $10,000 a metric ton on Friday, as fund buying intensified.
CONCERNS FOR SOUTH AFRICA
A condition of BHP’s proposal is that Anglo first distributes to shareholders its stakes in Anglo American Platinum (Amplats) and Kumba Iron Ore, which operate in South Africa, where BHP has no assets.
A source familiar with BHP’s thinking said those assets would be better managed locally. BHP divested its smaller assets through a spin-off years ago to focus on larger commodities.
Any departure by Anglo, which was founded in Johannesburg in 1917 and employs more than 40,000 people in South Africa, would be a new economic blow for the country, which has seen the platinum it mines fall out of favor. The South African Public Investment Corporation (PIC) owns 6.99% of Anglo American, according to LSEG data.
South Africa’s government is examining BHP’s proposed bid, which comes weeks before a general election in which voter anger over a stagnant economy and high unemployment could cost the long-ruling African National Congress its majority. time.
BHP investors may also have concerns about the merits of the deal as it faces different regional jurisdictions and some Anglo American businesses have lower margins than BHP, analysts said.
“It is not clear how BHP adds value to the deal if it is required to offer much more,” said Pendal portfolio manager Brenton Saunders, commenting on the complicated structure of the deal.
BHP Chief Executive Mike Henry and several executives, including chief financial officer Vandita Pant, will brief investors next week, according to fund managers.
The operation, if successful, would be the largest mining acquisition worldwide in 2024 and would be among the 10 largest operations in the sector of all time, according to LSEG data.
