If the last big bid for an SA company now listed in London is any guide, Anglo American’s days as a global mining company are over.
It will take a while yet but the “proposal” last month by Australia’s BHP for all of Anglo — provided it dumps its SA assets — sets in motion an unstoppable process.
It starts with Anglo rejecting the offer. Then the SA government voices its concern and the putative buyer rushes in to calm ruffled feathers. The proposal is raised and tweaked and other bidders take a sniff as well, and on and on.
In the SA assets, Anglo American Platinum and Kumba, the iron-ore producer, panic reigns in the executive suites. Who is the next owner to be?
Plots to buy both are hatched in the merchant banks and experienced local managers are quizzed about their intentions and availability should new money emerge to buy the unwanted prizes.
But for the moment they, like their colleagues in London, the almost entirely non-SA board of Anglo are concerned principally
for themselves. They each know to the penny the value of their incentive schemes and bonus packages.
If at the end the price is right none of the Anglo executive team ever have to work another day in their lives.
It will take months, if not years, to conclude, if indeed BHP presses on. In SA, the government doesn’t know whether to laugh or cry.
Mineral resources & energy minister Gwede Mantashe, unable to immediately think of anyone he might know who might be able buy either (or both of) Kumba and AngloPlat, quickly denounced the offer. Over at the presidency though, spokesman Vincent Magwenya seemed less strident on the matter.
The issue will still be live after the election on May 29 and you
can expect efforts to secure significant black ownership in these assets to intensify if it begins to look as if they may really become available.
Depending on the level of black interest you can also expect the competition authorities to involve themselves, citing public interest clauses now welded into competition law.
But one day the market was always going to do to the ANC what the ANC has done to the market. This might be the moment.
BHP may not have fully appreciated the extent to which trade, industry & competition minister Ebrahim Patel could, if he were still in office, and felt so disposed, stop this whole story in its tracks simply by delaying approval for the acquisition of the assets Anglo is being asked by BHP to discard. The state could slow the process to the point where pursuing it becomes simply untenable.
Patel is a diehard unionist, utterly uninterested in personal wealth and is rough with acquisitive foreigners when they come for assets here.
But Patel is not on the ANC list for the election and, while the president can co-opt a few civilians into his cabinet, I think Patel’s 15 years of failing to slow the deindustrialisation of the
economy are done.
Ramaphosa adores him though, and may plan an international role for him. A replacement of a more nationalist hue might help BHP.
The mergers and acquisitions market has been badly roughed up by the ANC in its three decades in office, and particularly by Patel in his one and a half.
But one day the market was always going to do to the ANC what the ANC has done to the market. This might be the moment. BHP’s complete disregard for either Kumba or AngloPlat is momentous for this country because it may be the answer to a critical question: who would want to buy a big business today in SA?
In our politics, obviously, the greater the number of black people involved in the new acquisitions the more likely it would find easy political passage through the competition authorities.
But the problem will be money. Kumba this week is worth roughly R149bn on the JSE. AngloPlat is worth R175bn. Both are off their peaks, but those are still serious numbers.
Who has this kind of money?
Or, who has money like this to put into iron-ore or platinum group metals? Anyone in for large bets on the global steel glut ever receding, or for how long the internal combustion engine is going to be around? Any petrol-head punks out there feeling long-term lucky?
Anyone got this kind of money to put up for industries regulated by Mantashe and his super-sharp departments?
BHP needs to appreciate that it is asking a lot of Anglo to simply shed these assets. Even if Anglo wanted to comply, the government here can hugely complicate the effort.
Could BHP perhaps help facilitate the divestments?
BHP would look extremely foolish if it didn’t pursue its proposal with some vigour now, but some serious tweaking of this offer is inevitable. This is an all-share offer so far, sex without the mess, but cash speaks louder than equity when you’ve moved off the beach and are busy raiding your first village.
At some stage the Australians will have to put more on the table, just like the South Americans did with SAB. But before that they have, under the UK listing rules governing Anglo, until May 22 to formally announce they intend making an offer.
BHP communications have stuck admirably with merely “proposal” so far but the BHP microsite on the official website is headed “Offer For Anglo American”, so perhaps we can dispense soon with the niceties and get on with the price stuff.
• Bruce is a former editor of Business Day and the Financial Mail.
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