Anglo American has rejected another takeover offer from BHP, marking the Big Australian’s third attempt at acquiring the company.
The latest offer, put forward on May 20, valued each Anglo share at 0.8860 BHP shares, up from the 0.8132 BHP shares proposed on May 13 and 0.7097 BHP shares proposed on April 25.
“This is a significant increase from our first proposal and would provide Anglo American shareholders with 17.8 per cent of a combined BHP and Anglo American,” BHP chief executive officer Mike Henry said.
“The revised proposal is underpinned by BHP’s disciplined approach to mergers and acquisition and our focus on delivering long term fundamental value.
“BHP’s revised proposal will offer immediate value for Anglo American shareholders and allow them to benefit from the long-term value generation of the combined group.”
Anglo promptly rejected the proposal, which is worth about $74 billion.
“The board is confident in Anglo American’s standalone future prospects and believes that Anglo American has set out a clear pathway and timeframe to deliver the acceleration of its strategy to unlock significant and undiluted value for Anglo American’s shareholders,” Anglo American chairman Stuart Chambers said.
“The board considered BHP’s latest proposal carefully, concluded it does not meet expectations of value delivered to Anglo American’s shareholders, and has unanimously rejected it.”
Chambers said the latest offer doesn’t address Anglo’s concerns about the structure of the proposed acquisition.
A key example of this is the proposed demerger between Anglo and Anglo American Platinum and Kumba Iron Ore, which Anglo previously described as “highly unattractive”.
Chambers said the demerger could take as long as 18 months to complete and it carries “significant execution and completion risks relating to both value and time”.
“Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues,” Chambers said.
“However, the board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one-week extension to the PUSU (put up or shut up) deadline which has been consented to by the panel.”
BHP has until May 29 to propose another offer.
Amid the BHP frenzy, Anglo has received “strong interest” for the five Australian coal mines it plans to divest as part of its major asset breakup.
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