BHP’s $60 billion takeover bid for Anglo American has been rejected.
The proposal comprised an all-share offer for Anglo American by BHP and would be preceded by separate demergers by Anglo American of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore to Anglo American shareholders. The two parts of the proposal would be inter-conditional.
Upon receiving the offer, Anglo American said that its Board was reviewing BHP’s proposal with its advisers, and that there could be no certainty that any offer would be made nor as to the terms on which any such offer might be made.
BHP said in a media release that under the terms of its proposal, ordinary shareholders of Anglo American would receive:
- 0.7097 BHP shares for each ordinary share in Anglo American
- Ordinary shares in Anglo Platinum and Kumba (which would be distributed by Anglo American to its shareholders in direct proportion to each shareholder’s effective interest in Anglo Platinum and Kumba)
The terms of the proposal would, based on closing market prices as of 23 April 2024, represent:
- A total value of approximately £25.08 per Anglo American ordinary share including £4.86 in Anglo Platinum shares and £3.40 in Kumba shares, valuing Anglo American’s share capital at £31.1 billion ($59.6 billion)
- A premium on the implied market value of Anglo American’s unlisted assets of approximately 31 per cent
- A premium on the implied market value of Anglo American’s unlisted assets of approximately 78 per cent to the volume weighted average closing price of Anglo American’s shares in the 90 trading days prior to and including 23 April 2024
- A 19 per cent premium to the broker median net asset value of Anglo American excluding Anglo Platinum and Kumba of USD$21.8 billion
The proposal was non-binding and subject to customary conditions including completion of due diligence to the satisfaction of BHP. Anglo American washas been offered reciprocal due diligence on BHP.
In addition to allowing Anglo American shareholders to realise an immediate and substantial premium over the current value of their Anglo American shares, BHP has said that the combination would deliver further ongoing value for Anglo American shareholders.
BHP said that the potential benefits of the combination would be:
- The combination would bring together the strengths of BHP and Anglo American in an optimal structure. Anglo American would bring its assets and long-term growth potential. BHP would bring its higher margin cash generative assets and growth projects along with its larger free cash flows and stronger balance sheet
- The combined entity would have a leading portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore and metallurgical coal and future-facing commodities, including potash and copper. These would be expected to generate significant cash flows and the combined entity would have the financial capacity to support value-adding growth projects at the optimal time, while continuing BHP’s commitment to shareholder returns
- The combination would also deliver meaningful synergies, including sharing best practice, creating procurement, operational and marketing synergies and eliminating duplication, which would enhance profitability and value for Anglo American shareholders
- The combined entity would retain BHP’s global listings on the ASX, LSE, JSE and NYSE and Anglo American shareholders would be able to benefit from the BHP’s monthly share trading liquidity of approximately USD$10 billion
- The proposal would provide Anglo American shareholders with the benefits of directly holding their interests in Anglo Platinum (78.6 per cent), the world’s leading PGM miner, and Kumba (69.7 per cent) as shareholders, including enabling direct access to the future value generation and dividends of Anglo Platinum and Kumba. Additionally, Anglo American shareholders would gain the ability to calibrate their relative exposures and determine their optimal shareholding levels in Anglo Platinum and Kumba
Anglo American response
After consideration with its advisers, Anglo American’s Board unanimously rejected BHP’s proposal after concluding that the proposal significantly undervalues Anglo American and its future prospects.
Anglo American said that the proposal contemplates a structure that the Board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal and significant execution risks.
Anglo American’s Chairman, Stuart Chambers, said, “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.
“With copper representing 30 per cent of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the Board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises.
“The BHP proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders.
“The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders. Anglo American has defined clear strategic priorities – of operational excellence, portfolio, and growth – to deliver full value potential and is entirely focused on that delivery.”
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