Anglo American said it won’t give BHP Group any further time to commit to a takeover offer, signalling the likely end for now to a US$49 billion pursuit by the world’s biggest mining company.
The decision marks a dramatic climax to the five-week battle between two of mining’s biggest names, just hours before a 5 pm deadline for BHP to commit to an offer or walk away for six months.
Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but last week agreed to a one-week extension to a UK deadline in order to extend talks.
However, Anglo has raised repeated objections to the complicated deal structure and the two sides have been unable to find a solution. BHP made a last-minute push to pressure Anglo’s board earlier on Wednesday (May 29), citing commitments it has made to help get the deal approved in South Africa and saying it believed the risks were manageable.
But Anglo said its biggest concerns have still not been addressed.
“BHP has not addressed the board’s fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American’s shareholders,” it said. “The board has therefore unanimously concluded that there is no basis for a further extension.”
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A successful takeover would have created a commodities powerhouse that towered over its closest rivals, significantly increasing BHP’s copper production at a time when miners and their investors are positioning for a prolonged period of tight metal supply and rising prices.
The structure of BHP’s proposal – which required Anglo to first spin off its South African platinum and iron ore units – has remained a crucial sticking point. Anglo, which this month rushed out a radical restructuring plan of its own, wanted BHP to either change the structure or commit to cover any future costs to its own shareholders – who will end up owning the listed South African companies – as a result of the multi-step deal.
Several of Anglo’s biggest shareholders said last week that they supported the company’s efforts to persuade BHP to change the structure of its takeover proposal or compensate for the risks it presented. BLOOMBERG
