Mining Rival Anglo American Rejects BHP’s $60 Billion Takeover Bid
If implemented, the proposal would make BHP the largest copper producer in the world.
The board of Anglo American unanimously rejected BHP’s £31.1 billion (A$59.5 billion) all-share offer, stating that the proposal is “opportunistic and does not adequately value Anglo American’s prospects.”
BHP’s unsolicited, non-binding, and highly conditional combination offer requires Anglo American to conduct two separate demergers of its entire shareholdings in subsidiaries Anglo American Platinum and Kumba Iron Ore to Anglo American shareholders.
Anglo American expressed concerns that the proposal would significantly dilute the value of upside participation of its shareholders compared to BHP’s shareholders. Upside participation measures how much an investment’s value increases when the market or asset it’s tied to goes up.
“The proposed structure is also unattractive, creating substantial uncertainty and execution risk primarily for Anglo American, its shareholders, and other stakeholders,” said Anglo American Chairman Stuart Chambers.
“Anglo American has clearly defined strategic priorities of operational excellence, portfolio, and growth to realize its full value potential and is fully focused on achieving that,” he added.
Anglo American highlighted its ability to create significant value from assets aligned with the energy transition, with copper accounting for 30 percent of the company’s total production.
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The company advised its shareholders not to take any action regarding the potential offer, noting that it is uncertain if a firm offer will be made.
BHP Confirms Proposal
The decision to reject the offer came after BHP confirmed its offer in a stock exchange disclosure.
BHP mentioned that Anglo American’s high-quality iron ore operations in Brazil and metallurgical coal projects in Queensland, Australia, would complement its existing portfolio.
Furthermore, the proposed acquisition would enhance BHP’s exposure to future-facing commodities through Anglo American’s top-notch copper assets.
Additionally, Anglo American’s other assets, such as its diamond business, would undergo a strategic review following the completion of the acquisition.
BHP stated that the proposal aligns with its focus on long-term fundamental value and capital allocation framework.
Proposed Acquisition to Position BHP as World’s Biggest Copper Producer
If the proposal eventually materializes into a deal, BHP will emerge as the largest copper producer globally, as per analysts at Benchmark Mineral Intelligence.
“A scarcity of new mined copper resources poses a significant challenge for the energy transition, leading mining companies to merge in order to achieve growth,” said Yongcheng Zhao, Principal Copper Analyst at Benchmark.
“The proposed deal showcases miners’ urgency to boost production through acquisitions rather than organic growth to address the growing supply gap. However, this approach does little to bridge the supply gap itself,” noted Piotr Ortonowski, a project manager at Benchmark.
In a speech at the IEA Critical Minerals and Clean Energy Summit last year, BHP CEO Mike Henry emphasized the need for approximately $386 billion in growth capital investment in copper over the next seven years to limit temperature increases to 1.5 degrees Celsius.
“More projects need to be identified, permitted, and given the green light by potential investors,” said Mr. Henry.
Last May, BHP completed the acquisition of Australian copper producer OZ Minerals for $6.4 billion.
