Anglo American rejects BHP’s request to extend the deadline for takeover talks

Anglo American survived a takeover attempt by BHP, the Australian mining rival, worth almost £39bn after the last-ditch negotiations to restructure the 107-year old company failed.

Anglo’s five-week pursuit ended after BHP rejected Anglo’s request to extend takeover negotiations for a second round at the 11th hour, following three failed bids from the Melbourne-based mining company.

BHP was forced to make a choice between making a formal offer to Anglo shareholders on Wednesday at 5pm or giving up its pursuit of Anglo.

Mike Henry, BHP CEO, stated in a press release published just before the deadline: “BHP won’t be making a formal offer for Anglo American.”

The deal was supposed to transform the global mining industry but BHP refused to sell some of Anglo’s South African businesses as part of its takeover.

Anglo, a South African household name and largest shareholder of the South African Government, described the proposals as “highly complicated and unattractive”.

Henry stated: “While our proposal to Anglo American represented a compelling opportunity for us to grow the pie in value for both shareholders, we could not reach an agreement with Anglo American regarding our views on South African regulatory risks and costs. Despite our attempts to engage constructively, and despite our numerous requests, Anglo American did not provide the key information we needed to formulate measures that would address the perceived excess risk.”

The takeover discussions ended on Wednesday, as South Africans went to the polls.

BHP’s three acquisition approaches required that Anglo spin off its South African operations, including Kumba Iron Ore, and Anglo American Platinum – a major South African employer.

Anglo was against this and the South African government (whose Public Investment Corporation is Anglo’s biggest shareholder) also criticised it.

BHP’s latest proposal included a series of promises designed to win over South Africa’s politicians, investors and regulators.

It committed to maintaining staff levels at Anglo’s Johannesburg office, and continuing Anglo’s charitable commitments for at least three more years. It promised to create “a centre for excellence” in South African mining.

Anglo, however, said in a Statement that BHP “had not addressed the board’s concerns” regarding the forced demergers of its South African business. The company added that BHP’s “limited” socioeconomic measures were “limited in scope, effect and duration”.

Anglo said that after discussions with shareholders it concluded that there was no reason to extend the deadline for takeover talks due to the “highly complicated and unattractive” structure of the proposed deal.

The company intends to fend off the larger competitors by proposing its own corporate restructuring, which includes a promise that it will break up its 107-year old business and sell its De Beers diamonds arm as well as its platinum division. South Africa’s government has backed the plan.

Stuart Chambers said that Anglo American had a “clear path to accelerate the delivery of its strategic plan”.

He said: “We are looking forward to delivering on our plans, for our shareholders and stakeholders in both our host countries as well as more widely.”

Anglo’s huge reserves of copper is a major driver of interest in the company, as the mineral is a building block of low-carbon technologies like solar farms and electric vehicles.

The company is also reportedly attracting the attention of Australia’s Rio Tinto, and the Swiss mining firm Glencore.

Church of England Pensions Board, which owns a 1% share in Anglo, welcomed Anglo’s refusal to engage BHP for further discussions.

Adam Matthews said that the proposed takeover was not in the best interests of the pension fund members. We believe that a strongly-backed Anglo would be better for the mining industry in general, global transition, and maintaining a strong presence in South Africa.