BHP walks away from Anglo American takeover

BHP (ASX: BHP) has confirmed it does not intend to make a firm offer for Anglo American after its first three were rejected.

Chief executive Mike Henry commented on the update.

“BHP will not be making a firm offer for Anglo American. BHP is committed to its capital allocation framework and maintains a disciplined approach to mergers and acquisitions,” he said.

“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 an agreement with Anglo American on our specific views in respect of South African regulatory risk and cost.

“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.”

In late April, Anglo American received an unsolicited, non-binding and highly conditional proposal from BHP.

Under the proposal, Anglo American shareholders would receive 0.7097 BHP shares for every Anglo share, plus ordinary shares in Anglo American Platinum and Kumba Iron Ore.

The company rejected the $59.57b (£31.01b) proposal as it “significantly undervalued Anglo American and its future prospects”.

Additionally, Anglo American’s board believed the proposal contemplated a structure which was highly unattractive for shareholders, given the uncertainty and complexity in the proposal and significant execution risks.

BHP put forward a second proposal in early May, but it was again rejected as Anglo American believed it to still significantly undervalue the company.

Anglo American shareholders were to receive 0.8132 BHP shares and ordinary shares in Anglo American Platinum and Kumba Iron Ore.

Anglo American then rejected a third takeover proposal after BHP put forward a new offer in mid-May.

Under the terms of the third proposal, Anglo American shareholders would have received 0.8860 BHP shares and ordinary shares in Anglo American Platinum and Kumba Iron Ore for every Anglo American share held.

Anglo American chairman Stuart Chambers commented on the proposals.

“Anglo American has set out a clear pathway to accelerate delivery of its strategy and to unlock significant value for its shareholders,” he said.

“Our shareholders will benefit from value transparency and undiluted exposure to a simpler portfolio of world class assets, consistently stronger operational performance and highly attractive growth in copper, premium iron ore and crop nutrients.

“Anglo American’s management team, supported by the board, is fully focused on delivering the plans it has set out to accelerate value delivery, and doing so at pace.”