Anglo American declines BHP’s increased £34bn offer

In a high-stakes battle between mining giants, Anglo American has rejected an improved takeover proposal from rival BHP valued at £34bn. BHP’s new offer of £27.53 per share represents a 15% increase from their original bid and a 30% premium to Anglo’s share price before takeover talks went public.

Despite the increased offer, Anglo’s board deemed it “significantly undervaluing” the company’s assets and prospects, labeling the structure as “highly unattractive” for shareholders. This rejection comes after Anglo turned down a previous £31bn bid from BHP for similar reasons.

BHP, disappointed by the lack of engagement from Anglo, still has until next Wednesday to decide whether to make a formal bid. The proposed merger would create the world’s largest producer of copper, a critical metal in global decarbonization efforts, and expand BHP’s presence in iron ore and steelmaking coal.

The pressure is on Anglo’s chief executive, Duncan Wanblad, to prove that a standalone strategy would yield better returns for investors. BHP’s CEO, Mike Henry, emphasized the “win-win” nature of the proposal, which would increase Anglo shareholders’ ownership in the combined company to 16.6%.

However, the deal faces opposition from South Africa, as BHP’s proposal requires Anglo to spin off two South African businesses before proceeding. The South African state-owned entity, Public Investment Corporation (PIC), a major Anglo shareholder, has expressed concerns about this condition.

As the mining sector’s largest-ever deal hangs in the balance, analysts predict that an offer above £30 per share would be necessary to sway all of Anglo’s shareholders. With Anglo set to unveil its own strategic plan, the future of this high-stakes takeover bid remains uncertain.