BHP abandons $49 billion bid for mining competitor Anglo

BHP Group’s $49 billion bid to acquire Anglo American has come to an end, as Anglo rejected a last-minute request for more time, effectively halting BHP’s six-week pursuit. The main reason for the collapse of the deal was the structure proposed by BHP, which required Anglo to unbundle its South African platinum and iron ore businesses.

BHP’s primary goal in acquiring Anglo was to secure its prized copper assets in Latin America, a metal crucial to the global shift towards clean energy and electric vehicles. Despite granting BHP a one-week extension, Anglo ultimately decided to stick to its original deadline and declined the takeover proposal.

In response, BHP expressed disappointment in not being able to reach an agreement with Anglo on key issues related to South African regulatory risk and cost. The company believed its proposal was the most effective way to deliver value for Anglo American shareholders and was confident in obtaining all necessary regulatory approvals.

On the other hand, Anglo reiterated its commitment to increasing shareholder value through its own strategic plans, which include divesting less profitable assets and focusing on expanding copper output. The rejection of BHP’s proposal caused Anglo’s shares to close 3% lower at 24.80 pounds.

Analysts have mixed opinions on the outcome, with some viewing BHP’s disciplined approach positively, while others question the lack of a plan to address the structural issues in the deal. Despite BHP’s efforts to engage with Anglo and minimize regulatory risks, the proposed commitments were deemed insufficient by Anglo.

The potential economic impact of the failed acquisition is significant, with estimates suggesting outflows of $4.3 billion from South Africa and a weakening of the rand if the deal had gone through. Additionally, the rejection of BHP’s proposal reflects concerns shared by Anglo’s investors regarding the risks and price offered.

Overall, the collapse of the BHP-Anglo deal highlights the complexities and challenges involved in major acquisitions within the mining industry. Both companies will now focus on their respective strategies and goals, with Anglo continuing its efforts to enhance shareholder value and BHP evaluating its next steps in light of the failed takeover bid.