Unlock Editor’s Digest for free
FT editor Roula Khalaf picks her favorite stories in this week’s newsletter.
Anglo American has extended takeover bid talks with BHP, keeping alive the prospect of the biggest deal in the mining sector even after the UK-listed group rejected a third £38.6bn approach.
BHP now has until 5pm UK time on May 29 to make a formal bid for its smaller rival after increasing the number of shares on offer to Anglo investors in its third and “final” draft deal.
Anglo will continue talks with BHP for another week, despite saying it remains “serious concerns” about the complex deal structure that requires it to spin off the two South African units.
The expansion keeps alive BHP’s hopes that it can still secure a deal that would transform the global mining industry and give the Australian company access to more copper, a metal vital to decarbonisation.
BHP said in a separate statement on Wednesday that its third all-share offer valued Anglo at £31.11 a share based on the May 22 closing price and that this represented its “final offer ratio”.
The statement added that under UK takeover rules, the bid can be increased subject to certain conditions, such as Anglo’s board agreeing to recommend a higher bid or an offer from a rival company to Anglo. But BHP has no intention of improving the share offer or changing the structure of the deal, according to people familiar with the company’s plans.
Anglo’s board unanimously rejected the third proposal. Chairman Stuart Chambers said the offer “does not meet expectations of value delivered to Anglo American shareholders” but that the board is “willing to continue discussions with BHP and its advisers on this matter”.
Ben Davis, a mining analyst at Liberum, said the late turnaround meant a deal was still possible, but that Anglo’s resistance to the first spin-off of its South African businesses remained an issue. “Final offers are never final and the door has been left open, but it is difficult to see how to ‘secure’ BHP’s proposed structure,” he said.
Anglo said the latest proposal valued its shares at £29.34, based on its closing share price on April 23, before news of the merger talks became public. BHP’s previous offer valued Anglo at £27.53 a share, or £34bn. It originally offered £25 a share, or £31 billion.
The deal would hand Anglo shareholders a 17.8 percent stake in BHP, according to BHP, and represents a 47 percent premium to Anglo’s share price before news of the merger talks became public.
BHP chief executive Mike Henry said the company “looks forward to working with Anglo American’s board to explore this unique and compelling opportunity to combine two highly complementary world-class businesses”.
News of BHP’s improved offer came hours after the Public Investment Corporation, the South African state investor that is Anglo’s second-largest shareholder, said BHP needed to carry out a “meaningful review” of its offer.
Anglo said in a statement: “The board continues to believe that there are serious concerns about the structure given that it is likely to result in significant completion risk and a value impact that falls disproportionately on Anglo American shareholders.
Anglo unveiled plans for a dramatic turnaround last week to break up by spinning off its coal, diamond and platinum divisions in a bid to fend off BHP.
BHP’s proposal to separate the two blocs caused controversy in South Africa during an election year, as it was seen as BHP passing a vote of no confidence in the country.
Anglo shares were down 0.2 per cent at £26.81 in afternoon trading in London.
