The Australian miner will not be making a firm offer for Anglo American after its overtures were rejected by the London and Johannesburg-listed firm.
Mining group BHP Group on Wednesday walked away from its $49 billion plan to take over rival Anglo American, which rejected a last-ditch request for more time, ending for now its six-week pursuit.
BHP's aim was to secure Anglo's prized copper assets in Latin America and increase access to a metal central to the global shift towards clean energy and electric vehicles. But the structure of BHP's deal, which required Anglo to unbundle its South African platinum and iron ore businesses, was a major reason for its collapse.
Anglo had granted BHP a one-week extension until 1600 GMT on Wednesday to its original May 22 deadline to submit a binding offer, after rejecting a third takeover proposal. Under UK rules, BHP cannot return for at least six months, unless there is another offer for the London-listed miner.
"While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost,"
BHP said.
"We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa,"
it added.
In a press release, Anglo stated that BHP failed to address their fundamental concerns of the risk associated with demerging South Africa-based Anglo American Platinum and Kumba Iron Ore, and therefore see no basis for extending the deadline again.
The conclusion comes more than a month since BHP made its first offer to take over its smaller rival for $39bn. Since then, BHP has upped its offering price on two occasions to $43bn at the start of May, and a ‘final offer’ of $49bn last week.
At the same time, Anglo have come out with their own ‘accelerating value delivery’ plan, which positions the firm to refocus on copper while spinning out or selling their less profitable coal, nickel, diamond and platinum businesses.
“Throughout the engagements with BHP, BHP continues to restate its belief that the risks of its complex structure are not material, yet has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks,”
said a statement from Anglo American.
BHP, on the other hand, “believes that the risks are quantifiable and manageable,” according to today’s statement, and have stated that they have already factored the costs associated with these risks into its proposal.
BHP had stated their intention to continue Anglo American’s legacy of social investment in South Africa in order to ease concerns, proposing socio-economic initiatives such as maintaining current staff levels at Anglo’s Johannesburg office, and keeping BHP listed on the Johannesburg Stock Exchange for at least three years. Anglo American have called these measures, “confined in scope, impact and duration” and commented that they do not address risks sufficiently.
Sources: Reuters, African Business
