BHP (ASX:BHP) has been knocked back again in its bid to acquire Anglo American, facing a stiff block from the London-listed miner’s board after tabling an improved £27.94 per share bid.

The revised proposal was never likely to be accepted, but seemed to be an attempt to smoke out Anglo’s board and see what it would engage with.

It came at a delicate time for Anglo, with an investor update today expected to outline the struggling conglomerate’s plans to build value as a standalone business.

And BHP’s language has grown more adversarial, with the ASX-listed iron ore, copper and coal miner claiming its new bid sits at a 37% premium to the broker median NAV of Anglo’s unlisted assets based on it its pre-bid share price.

Claimed to come in at a value of £34bn ($64.5b AUD), the deal bears a similar structure to a previous proposal, including the jettisoning of Anglo’s unpopular platinum and South African iron ore stakes into Anglo shareholders’ hands at a respective £4.86 and £3.40/sh.

But the control of BHP Anglo holders would claim has been bumped up from 14.8% to 16.6%.

CEO Mike Henry has finally weighed in as well, taking a similar approach to the PR battle waged to secure BHP’s $9.6bn takeover of OZ Minerals in 2022 and 2023.

“BHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected,” he said.

“The revised proposal represents a 15% increase in the merger exchange ratio and increases Anglo American shareholders’ aggregate ownership in the combined group to 16.6% from 14.8% in BHP’s first proposal.

“BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.

“The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets.”

Not all analysts and shareholders are confident in those synergies. BHP’s bid has already seen opposition from South Africa, including its mines minister.

RBC’s Kaan Peker said in a note yesterday that BHP would likely need to offer more than £30/sh to nab the deal, but would need to find over US$11bn of  synergies to make it worthwhile.

He estimates synergies of just US$4.1-6.8bn, with significant negative synergies from the spinout of the Kumba Iron Ore and AmPlats divisions.

Long term value

There are three big prizes for BHP in its Anglo bid. Principal to that is Anglo’s copper assets in Peru and Chile, which despite recent output issues, are among the largest and cheapest to operate mines in the global cost curve.

If analyst predictions of US$12,000/t copper come to fruition, BHP’s move could look prescient.

On top of that Anglo’s high grade Minas Rio iron ore mine in Brazil and met coal assets in Queensland are attractive to BHP.

“The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American’s portfolios,” Henry said.

“In putting forward a revised proposal, we have been guided by our capital allocation framework and our view of the fundamental value of Anglo American and BHP.

“The combination is consistent with BHP’s strategy and the revised proposal is underpinned by a focus on delivering long term fundamental value.”

Anglo’s rejection was swift and expected, with chairman Stuart Chambers saying it fails to “recognise the value inherent in Anglo American”.

But at the same time, his comments provide a hint at where the sticking points may be resolved.

“Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive,” Chambers said.

“The Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.”

In short, Anglo’s board knows what BHP is after and wants more for it. There’s another wrinkle they’ve pointed out — the approvals timeline with the South African Government could be protracted and difficult when it comes to the spinouts of AmPlats and Kumba.

“This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum Limited and Kumba Iron Ore Limited. This creates significant uncertainty as to the delivered value as part of the proposal,” Anglo noted.

“In addition, by requiring this as part of a takeover of Anglo American, it would result in additional approvals related to these two demergers. The timetable to obtain these additional approvals is expected to be lengthy.

“Some of these approvals may result in potential conditions being attached to the approvals, which could disproportionately impact Anglo American Platinum Limited and Kumba Iron Ore Limited and are not addressed in the Latest Proposal.”

Anglo shares hit a record £41.68/sh in mid-2022 as commodity prices surged after Russia’s invasion of Ukraine, but fell to as low as £17 after revealing a massive drop in copper guidance in December.

$220bn capped BHP is down almost 15% YTD, but at $43.16 its shares are less than 20% off all time highs hit amid an iron ore boom in mid-2021.


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All that amounted to a bare 0.3% drop for BHP, with investors clearly sensing more water to flow under this bridge.

It fell roughly in line with the rest of the Materials sector, which fell 0.4% as of 3.15pm AEST.

Aussie mining investors will also be waiting for cues from tonight’s Federal Budget, which is likely to feature a major component focused on critical minerals and renewable tech.


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