Anglo American rejects BHP’s third offer of £38.6bn

Anglo American rejected a third attempt at a takeover by BHP, after the Australian firm sweetened its bid in an effort to create a mining giant.

BHP announced earlier this week that it had made a “final and increased” bid for Anglo of £31.11 per share, which values the FTSE100 company at £38.6bn.

Anglo rejected BHP’s previous two offers: The first in April valued the mine at £31bn, and the second last week was rejected . It put the value at £34bn.

The largest takeover attempt in mining history, BHP’s attempted acquisition would have created a global player on markets for commodities such as copper, iron ore and potash, used in steelmaking.

Copper is a high-demand raw material for the transition to low carbon energy. It is used as a component in electric vehicles and renewable energies projects. Anglo’s main assets are its copper mines located in Chile and Peru.

BHP stated that after the previous two rejections it was “engaging” with Anglo American, its advisors and the company to ease concerns about the deal. It expressed hope that a resolution could be reached within the next seven day.

Mike Henry, BHP’s chief executive, said that the revised proposal was based on BHP’s disciplined approach towards mergers and acquisitions, and our focus to deliver long-term fundamental value.

The revised BHP proposal offers immediate value to Anglo American shareholders, and allows them to benefit from long-term value creation of the combined group.

BHP’s bid to buy Anglo may still be thwarted by a competitor. According to reports, the Swiss mining company Glencore is considering its own strategy.

BHP’s conditions require that Anglo American Platinum, Kumba Iron Ore and its other stakes be sold to BHP. Cash will then be returned to the shareholders.

Duncan Wanblad has promised that if BHP fails, Anglo will break up its business and sell its De Beers diamond division.

Stuart Chambers, chair of Anglo American said that the board had carefully considered BHP’s most recent proposal and concluded it did not deliver on expectations for value to Anglo American shareholders. They unanimously rejected this proposal.

Chambers stated that its board is “confident in Anglo American’s future prospects as a standalone company” and BHP has not addressed Chambers’ concerns regarding the complicated terms of the acquisition.

He said that despite multiple engagements, the BHP team has not been able resolve these concerns.

Anglo’s split-up plan received a boost from one of its biggest shareholders, Legal & General Investment Management. The company called it a “radical, but attractive strategy”.

South Africa’s government, through the Public Investment Corporation (PIC), is Anglo-American’s largest shareholder and has many of Anglo American’s mines. The PIC is not impressed by BHP’s attempts to takeover the company and stated on Wednesday, before the latest offer was made, that the previous bid needed “meaningful revising”.

BHP had until Wednesday at 5pm to either make a better offer or withdraw for six months, according to City takeover regulations. Anglo has said that the deadline for BHP to make an improved offer or walk away from City takeover rules has been extended to 29 May.