Anglo American rejects second BHP takeover bid – this time worth £34bn

Anglo American has rejected a second takeover bid from BHP – which was worth £34bn – it has been confirmed.

The FTSE 100-listed mining company received a first offer in April which valued it at £31bn – a 13 per cent premium to Anglo’s share price at the time the bid was announced.

The second bid had been widely expected ahead of the May 22 deadline.

The business has been conducting a strategic review of its business since the middle of 2023, examining its operations on a mine-by-mine basis in to assess how it can recover the ground lost on its competitors in recent years.

The news comes after five of Anglo’s largest shareholders privately urged the company to speed up the review’s publication, according to Bloomberg.

In a statement, BHP said it was “disappointed that the Anglo American board has chosen not to engage with BHP with respect to the revised proposal and the improved terms”.

Anglo American deal a “unique and compelling opportunity”

BHP chief executive Mike Henry said:”BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders.

“We are disappointed that this second proposal has been rejected.

“The revised proposal represents a 15 per cent increase in the merger exchange ratio and increases Anglo American shareholders’ aggregate ownership in the combined group to 16.6 per cent from 14.8 per cent in BHP’s first proposal.

“BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.

“The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets.

“The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American’s portfolios.

“In putting forward a revised proposal, we have been guided by our capital allocation framework and our view of the fundamental value of Anglo American and BHP.

“The combination is consistent with BHP’s strategy and the revised proposal is underpinned by a focus on delivering long term fundamental value.”

“Disproportionately at risk”

In a separate statement Stuart Chambers, chairman of Anglo American, said:”The latest proposal from BHP again fails to recognise the value inherent in Anglo American.

“Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive.

“The Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.

“The BHP proposal also continues to have a highly unattractive structure.

“This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover.”

Analyst reaction

Reacting to the news Ashwin Pillay, senior associate at Charles Russell Speechlys, said: “A second rejection from Anglo American signals that the company is a hot commodity to global investors, showcasing the FTSE’s ongoing resilience.

“A combination of interest rate cuts, slowing inflation, and a depreciating pound have all led to a stellar performance by the FTSE 100.

“With a general election on the horizon amidst ongoing economic uncertainty, the question remains as to whether the FTSE can maintain its upward momentum, or whether it will continue being outstripped by markets in the US and Europe.

“We’re currently witnessing a surge in international M&A activity, indicating a potential dynamic change in the global business environment that could redefine cross-border economic interactions.”