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BHP’s £39 billion takeover bid for Anglo American has collapsed after a frantic six-week chase.
In the final day of the standoff, BHP called for an extension to the talks, which Anglo rejected, before the Australian miner finally abandoned its takeover bid minutes before a UK deadline to make a binding offer or walk away.
“While we believed our proposal for Anglo American was a compelling opportunity to effectively increase the value pie for both sets of shareholders, we were unable to reach an agreement,” BHP chief executive Mike Henry said in a statement on Wednesday.
Henry targeted Anglo’s prized copper business, which was expected to boom given the metal’s key role in the energy transition, but had no interest in taking over Anglo’s South African operations, Anglo American Platinum and Kumba Iron Ore.
The proposed deal required Angle to first separate the two businesses and was ultimately deemed too risky by Angle’s board, which said on Wednesday that the offer remained “very complex and unattractive”.
Although price disagreements eased over the past month after BHP cut its all-share offer three times, the two companies have always remained at loggerheads over the structure of the deal.
Anglo shares closed at £24.58, down 4 per cent on the day, in London.
Anglo said making the takeover conditional on the spin-off of Kumba Iron Ore and Anglo American Platinum, a major employer in South Africa, would leave its shareholders exposed to any conditions Pretoria might impose when control of the companies changes.
BHP dismissed those fears earlier on Wednesday, saying the risks of its plan were “quantifiable and manageable” and that Anglo had overstated any costs to shareholders. “BHP is confident that the measures it has proposed to Anglo American’s management provide a viable pathway to address the issues raised by Anglo American and will support South African regulatory approvals,” it said.
BHP’s Wednesday deadline to make a firm offer or walk away, chosen by Anglo, coincided with a national election in South Africa, adding an extra layer of political complexity.
Gwede Mantashe, South Africa’s influential minerals minister and a close ally of President Cyril Ramaphosa, said he agreed with Anglo’s decision to end its involvement with BHP. “Now they have to restructure and respond to the demands of the times,” he said, referring to Anglo’s alternative plan to break up the London-listed miner.
BHP’s latest request for an extension came as Henry met with shareholders in London in an effort to drum up support. Many large asset managers, such as BlackRock, hold stakes in both companies.
In rejecting BHP’s request, Anglo’s board said it had held “extensive engagement” with its shareholders before concluding “unanimously” that there was “no basis for a further extension”.
Anglo chief executive Duncan Wanblad must now show those shareholders he can carry out his own restructuring, which was revealed last month in response to BHP’s approach.
Under the proposals, Anglo will spin off Amplats and sell other businesses including its trophy diamond brand De Beers to focus on copper, iron ore and fertilisers.
“BHP doesn’t want to launch a hostile bid, but that still leaves Anglo under a lot of pressure to deliver,” said Ian Woodley, an analyst at Old Mutual Investments, which owns about 2 percent of Anglo.
In a closing statement, Anglo noted BHP’s decision to leave and said the company would focus on executing its restructuring plans “at a rapid pace”.
Additional reporting by Lukany Mnyanda and Arash Massoudi in London and Rob Rose in Johannesburg