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BHP has announced that it will not make a firm takeover offer for Anglo American following Anglo American’s rejection of BHP’s negotiations and request for a further extension. 

On 29 May 2024, BHP put forward a range of socioeconomic measures intended to address Anglo American’s concerns regarding the proposed transaction structure.

BHP’s proposal comprised an all-share offer for Anglo American subject to the pro-rata distribution by Anglo American of its entire shareholdings in Anglo Platinum and Kumba Iron Ore to Anglo American shareholders immediately before completion of the scheme of arrangement. 

Under the arrangement, Anglo Platinum and Kumba Iron Ore would continue to be listed in South Africa on the Johannesburg Stock Exchange (JSE). BHP said that it intended to maintain its listing on the JSE and expects to achieve a JSE index weighting of approximately five per cent on completion. 

BHP said that Anglo Platinum and Kumba Iron Ore would be independently run by established South African-based management teams and as self-governed companies, Anglo Platinum and Kumba Iron Ore would be better placed to reinvest cash flow and capital directly into South Africa. 

BHP said that as part of its increased presence in South Africa, the company intended to continue to build on Anglo American’s legacy of social investment and value creation in South Africa, including by: 

  • Sharing in the costs of increased South African employee ownership of the listed South African businesses if required to secure regulatory approvals
  • Establishing a Mining Centre of Excellence to support R&D, training and promotion of South Africa as a premier mining destination
  • Maintaining current employment levels at Anglo American’s Johannesburg office to provide ongoing support to the South African assets to be acquired and other assets in the combined group, as well as to Anglo Platinum and Kumba as a third party service provider
  • Maintaining funding for Anglo American’s charitable commitments in South Africa at the current level
  • Supporting local South African procurement and engagement across mining industry sectors and regions
  • Ensuring continued access for South African investors through the listing of BHP on the Johannesburg Stock Exchange
  • Maintaining Anglo American’s existing South African Reserve Bank (SARB) and National Treasury undertakings, to the maximum extent practicable

The proposed measures were expected to be maintained for a period of at least three years and BHP believed that its proposal would contribute to South Africa and allow the benefits of South African mining to be shared with more South African stakeholders.

BHP also requested a further extension of the PUSU deadline to allow for further engagement on the proposal.

In response, Anglo American said that the approach does not sufficiently address the fact that Anglo American’s shareholders would bear disproportionate execution and value risks and uncertainty over an extended period, nor does it consider that material conditions would likely be imposed in relation to both Anglo American Platinum and Kumba which would require the approvals of their respective boards. 

Anglo American said that after taking into consideration detailed feedback from the Board’s extensive engagement with Anglo American’s shareholders and stakeholders, the Board unanimously concluded that there is no basis for a further extension to the PUSU deadline.

Following this, on 29 May 2024, BHP confirmed that it does not intend to make a firm offer for Anglo American. 

BHP’s Chief Executive Officer, Mike Henry, said, “BHP is committed to its Capital Allocation Framework and maintains a disciplined approach to mergers and acquisitions. 

“While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and, despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.

“We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.”

Anglo American’s Chairman, Stuart Chambers, said the company has set out a clear pathway to accelerate delivery of its strategy and unlock significant value for its shareholders. 

“Our shareholders will benefit from value transparency and undiluted exposure to a simpler portfolio of world class assets, consistently stronger operational performance and highly attractive growth in copper, premium iron ore and crop nutrients. Anglo American’s management team, supported by the Board, is fully focused on delivering the plans it has set out to accelerate value delivery and doing so at pace.

“I thank Anglo American’s shareholders and stakeholders for their constructive dialogue throughout this period and our employees for their resilience and commitment. We look forward to delivering our plans for the benefit of our shareholders and for stakeholders, both in our host countries and more broadly.”

Image credit: Robert Way/Shutterstock.com.

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