The board of Anglo American has unanimously rejected BHP’s proposal to merge with it, saying the structure it contemplates is highly unattractive and Anglo will deliver significant value for shareholders on its own.
Australian mining giant BHP has until 22 May to put in a bid for Anglo after it proposed an all-share merger that would require Anglo to divest its controlling stakes in Anglo American Platinum and Kumba Iron Ore to shareholders.
“The BHP proposal is opportunistic and fails to value Anglo American’s prospects,” Anglo chairman Stuart Chambers said in announcements on the London and Johannesburg markets on Friday morning.
“Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends.”
“In addition, the proposal contemplates a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal and significant execution risks,” Chambers said.
BHP’s share price fell 4% Thursday on news of the proposal while Anglo’s jumped 16%.
Market players see BHP as taking advantage of the plunge over the past year in Anglo’s share price, which has been hit by the collapse in platinum group metals and diamond markets as well as by operational issues in SA.
BHP is more highly valued than Anglo, but is heavily exposed to iron ore and is keen to expand its presence in copper, where Anglo has rich mining assets in Peru and Chile. A merged group would be the world’s largest copper producer, with 10% of the global market.
Anglo said on Friday its shareholders stood to benefit from the fact that copper represents 30% of its total production and it has well sequenced growth prospects in copper. The group’s new Quellaveco mine in Peru came on stream last year and is still ramping up production.
The board also said it would deliver on its clear strategic priorities, benefiting shareholders.
Some in the market speculated the board’s response was an effort to get BHP to raise its price, rather than a definite “No”.
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