Anglo American has agreed to enter talks with larger rival BHP after rejecting a third proposal worth £38.6 billion ($73.95b), opening the door for the first time to what would be the biggest mining deal in over a decade.
BHP has increased the number of shares it is offering for Anglo but still wants the smaller company to first spin off majority stakes in South African platinum and iron ore companies.
Anglo said the latest offer remains overcomplicated, but indicated it’s willing to continue discussions with BHP.
BHP confirmed the new offer, which it described as “final” but noted that it would be willing to increase or otherwise improve the share ratio if Anglo’s board agreed to recommend a higher bid or if Anglo received an offer from someone else.
“Since the submission of the revised proposal, we have been engaging with Anglo American and its advisors to help mitigate the concerns associated with the implementation of this structure that led to the rejection of the revised proposal,” BHP said.
“We have made progress on these topics over the course of the engagement so far, and we are hopeful that resolution will be reached in the next seven days.”
The announcement extends a month of drama that has captivated the mining world, confirming the return to mega M&A by the industry’s biggest player after years on the sidelines, while triggering speculation that BHP’s rivals could enter the fray with competing bids.
Anglo had already twice rebuffed BHP proposals to first break up and then acquire the company, and instead rushed out a radical restructuring plan of its own.
The news also comes just hours before a regulatory cut-off for BHP to either commit to an offer or walk away for six months under UK takeover rules. Anglo has also agreed to an extension of the deadline to May 29.
Anglo shares were trading 2.4 per cent lower on the day at £26.22 at 2.31pm London time, little changed in the wake of the latest news. They remain far below the value of BHP’s bid.
The tug-of-war over Anglo’s future is taking place against the backdrop of surging copper prices, driven by a wave of speculative money betting on future shortages that sent London Metal Exchange futures to a record earlier this week.
Bloomberg