Australian mining giant BHP on Wednesday gave up on making a firm takeover offer for its rival Anglo American and its plan to form a copper titan, after the Briton refused to extend discussions.
“BHP will not make a firm offer for Anglo American,” said Mike Henry, chief executive of BHP, in a statement in which the group said it was “disappointed that the Anglo American board has decided not to continue discussions.”
Earlier on Wednesday, Anglo American rejected a request from BHP for more time to prepare a revised takeover offer. Under British takeover rules, BHP had to make a firm offer on Wednesday before 4 p.m. GMT (noon in Quebec) or withdraw.
BHP “did not respond to the fundamental concerns of the board of directors on the disproportionate risk associated with the structure” of the offer, which notably plans to separate from two South African subsidiaries of Anglo American, the group indicated British.
“We were unable to reach an agreement with Anglo American” on this subject, confirmed Mike Henry in the BHP press release. “Despite our efforts to engage constructively and our numerous requests, Anglo American has not provided the key information necessary” to improve the offer, he regretted.
A merger between the two groups would have been the most important in the sector in years, motivated in particular by the juicy prospects for copper, a key metal for the energy transition.
Cash rather than shares
Anglo American refused last week the latest improved offer to 38.6 billion pounds (67.26 billion Canadian dollars), but left the door ajar by agreeing to extend discussions for seven days.
The British group of South African origin had previously rejected two weaker offers and noted in particular the “significant complexity” and the “risks” for Anglo American shareholders of an offer which planned to separate from the activity of platinum and iron ore.
This proposal caused a stir in South Africa, in the run-up to general elections – organized this Wednesday – which promise to be the closest in decades.
“From the start, the structure of the buyout seemed too complicated and investors ultimately preferred cash” to a stock-settled operation as proposed by BHP, commented Dan Coatsworth, analyst at AJ Bell, who said he now expected to offers from other giants in the mining sector, such as Glencore or Rio Tinto.
Anglo American shares ended down 3.05% at 2,480 pence on Wednesday on the London Stock Exchange, while BHP gained 0.77% to 2,353 pence.
Early Wednesday, BHP argued that “a further extension of the deadline [était] necessary to enable further work on its proposal,” in a statement to the Australian Stock Exchange.
The group said it had presented a series of measures aimed at allaying concerns – including pledging to maintain Anglo American’s workforce in Johannesburg.
Competing project
The offensive was largely aimed at getting its hands on Anglo American’s copper mines, but the British group intends to capitalize these assets for its own account.
Anglo American announced two weeks ago a competing project to split several activities, including coal for metallurgy, but also platinum and diamonds in South Africa, to concentrate on copper, iron ore high-end and fertilizers.
“Our shareholders will benefit […] a simpler portfolio of world-class assets, ever-stronger operational performance and very attractive growth” in these three priority areas, welcomed Stuart Chambers, Chairman of the Board of Directors, at the end of the day on Wednesday. of Anglo American, in a press release.
Copper, used in many industrial applications, including the composition of electric vehicle batteries, has seen its prices soar over the past year and these are expected to continue to rise sharply given the exploding demand and limited resources.
Anglo American, founded in 1917 in South Africa by German-born industrialist Ernest Oppenheimer, is today one of the world’s largest mining companies, listed both in London, where it is headquartered, and in Johannesburg.