Yahoo Finance Anglo American agrees to takeover talks with BHP
Anglo American has agreed to open talks with mining rival BHP over a possible takeover despite rejecting a fresh £38.6bn approach from the Australian mining giant.
FTSE 100 listed Anglo said BHP’s latest takeover offer was too risky and complex to back but said it would negotiate with BHP on the structure of the deal to show it had given the company one last chance to come up with a new offer.
BHP tabled a sweetened £29.34 all share offer on May 20, which was again rejected by the Anglo board. The BHP offer came after two prior bids worth £25.08 per share and £27.53 per share were rejected. The prior bids valued BHP at £31.1bn and £34bn respectively.
Anglo has requested a one-week extension to the takeover panel’s bid deadline to May 29 so both sides can hold further talks. If they do not reach an agreement by this date, BHP must walk away.
The major sticking point for Anglo appears to be the complex structure of the deal.
BHP is proposing a conditional offer which involves splitting off Anglo’s subsidiaries, Amplats and Kumba, before it agrees to a takeover.
Anglo said the 18-month time frame involved in selling the units before it can finally be bought by BHP was too risky.
The UK headquartered group is a majority shareholder in both Amplats and Kumba, which are both listed on the South African stock exchange.
Stuart Chambers, chairman of Anglo, said: “The board considered BHP’s latest proposal carefully, concluded it does not meet expectations of value delivered to Anglo American’s shareholders, and has unanimously rejected it.
“In particular, it does not address the board’s concerns about the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American’s shareholders”
Mr Chambers said “multiple engagements” with BHP had failed to resolve the issue.
Mike Henry, chief executive of BHP, was more upbeat about the prospects of a deal.
He said: “BHP looks forward to engaging with the Board of Anglo American to explore this unique and compelling opportunity to bring together two highly complementary, world class businesses.”
Anglo, led by chief executive Duncan Wanblad, has unveiled a radical break-up plan including the sale of luxury diamond brand De Beers to survive the bid.
BHP originally had until 5pm Wednesday to lodge a formal offer.
Under the terms of the deal, Anglo shareholders would in effect be trading one Anglo share for three shares in BHP, Amplats and Kumba. The Telegraph reported last week that some shareholders would back the BHP deal if the complexity was dropped.
