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The Anglo American Board has unanimously rejected a third acquisition proposal from BHP but has offered a one week extension on the PUSU deadline.

BHP submitted an increased and final offer ratio to the Anglo American Board on 20 May 2024 as part of its proposal for a potential acquisition.

Under the terms of the latest proposal, for each Anglo American share owned, Anglo American’s shareholders would receive:

  • 0.8860 BHP shares
  • Ordinary shares in each of Anglo American Platinum and of Kumba Iron Ore (distributed by Anglo American to its shareholders in direct proportion to Anglo American’s shareholders’ effective interest in Anglo American Platinum and Kumba Iron Ore)

Anglo American said that the terms of the latest proposal represent a total value, based on undisturbed share prices as at market close on 23 April 2024, of approximately £29.34 per Anglo American share. 

On the basis of the 30-day and 90-day volume weighted average share prices up to and including 23 April 2024, the terms of the latest proposal would value Anglo American at £29.91 and £29.67 per Anglo American share, respectively.

BHP’s latest proposal includes the same structure as the proposals previously rejected on 26 April 2024 and 13 May 2024. This includes an all-share offer for Anglo American by BHP, with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore to Anglo American’s shareholders. The all-share offer and required demergers would be inter-conditional.

Anglo American said that the Board and its advisers have engaged with BHP and its advisers on multiple occasions with a particular focus on the proposed structure and associated risks. The Board said it continues to believe that there are serious concerns with the structure given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American’s shareholders. 

Anglo American said that the requirement to pursue two contemporaneous demergers of publicly listed companies alongside a takeover and the inter-conditional nature of the three transactions is unprecedented and as a result of a takeover would result in additional material approvals and conditions, particularly in South Africa. 

The company said that BHP’s latest proposal is in clear contrast to its simpler standalone plan to accelerate value delivery announced on 14 May 2024 and its proposal to demerge Anglo American Platinum.

The process proposed by BHP is expected to take 18 months or more to complete and carries execution and completion risks relating to both value and time. The key elements of Anglo American’s standalone plan to accelerate value delivery are expected to be substantively complete by that stage. 

Anglo American also said that the approvals required in relation to BHP’s latest proposal would also likely result in conditions being imposed that disproportionately impact Anglo American Platinum and Kumba Iron Ore and, therefore, Anglo American’s shareholders.

In addition, the company said that the Board also considered detailed feedback from its extensive engagement with Anglo American’s shareholders and stakeholders since the release of Anglo American’s accelerated plans for delivery of its standalone strategy on 14 May 2024, continuing its engagement with its shareholders since the approach from BHP became public on 24 April 2024.

The Anglo American Board said that it is confident in Anglo American’s standalone future prospects and believes that Anglo American has set out a clear pathway to deliver the acceleration of its strategy detailed on 14 May 2024 that is expected to unlock significant and undiluted value for Anglo American’s shareholders.

In order to allow for further engagement with BHP on the mitigation of risks and value impact on Anglo American’s shareholders that are inherent in its latest proposal, Anglo American also announced that, in accordance with Rule 2.6(c) of the Code, the Board has requested and the Panel on Takeovers and Mergers has consented to, an extension to the date by which BHP is required either to announce a firm intention to make an offer for Anglo American in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. 

Such announcement must be made by no later than 5pm on 29 May 2024. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

Anglo American’s Chairman, Stuart Chambers, said, “The Board is confident in Anglo American’s standalone future prospects and believes that Anglo American has set out a clear pathway and timeframe to deliver the acceleration of its strategy to unlock significant and undiluted value for Anglo American’s shareholders. 

“The Board considered BHP’s latest proposal carefully, concluded it does not meet expectations of value delivered to Anglo American’s shareholders and has unanimously rejected it. In particular, it does not address the Board’s concerns about the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American’s shareholders. Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues.

“However, the Board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one week extension to the PUSU deadline which has been consented to by the Panel.”

Image credit: II.studio/Shutterstock.com.

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