Anglo American rejects fresh £34bn takeover approach from BHP

Duncan Wanblad, chief executive of Anglo American, has promised to unveil a new strategy in a bid to fend off takeover advances - Ian Waldie

Anglo American has rejected a second takeover offer from Australian mining rival BHP and promised to set-out a new plan for growth to convince shareholders to back its future as an independent business.

The FTSE 100 mining group on Monday said it had rejected an improved £34bn takeover offer from BHP.

The second bid was priced at £27.53 per share, 9.7pc higher than the £25.08 a share approach rejected last month.

However, Anglo said the latest offer still “significantly undervalues” the group.

Duncan Wanblad, Anglo chief executive, and chairman Stuart Chambers promised to unveil a new strategy on Tuesday in a bid to convince shareholders to reject the continued takeover advances. Shareholders had complained about the slow pace of the group’s review.

Mr Chambers said the new plan would focus on “delivering against its strategic priorities of operational excellence, portfolio simplification and growth”

It has sparked speculation that Anglo American could spin-off divisions including its planned fertiliser mine in Yorkshire.

Deutsche Bank analysts said Anglo could simplify its sprawling empire by fully or partially selling luxury diamond brand De Beers and its fledgling polyhalite mine Woodsmith in North Yorkshire.

The outcome of the review will be closely watched by politicians in both the UK and South Africa because of the number of jobs tied to Anglo’s mining assets.

In the UK, Tory MP Sir Robert Goodwill has said he will seek assurances over the future of Woodsmith if the site changes hands.

Sir Robert, whose Scarborough and Whitby constituency is home to the project, told The Telegraph last month that mothballing the site was not an option because of its advanced state of development.

Analysts have suggested that Anglo American could simplify its structure by selling its Woodsmith site in North Yorkshire

Anglo’s mining commitment to South Africa is also particularly sensitive given how many local workers rely on the company. Upcoming South African elections on May 29 will further heightened scrutiny of Anglo’s plans.

Mr Chambers promised to “unlock value” at the group in light of the fresh BHP approach.

Management are seeking to bolster the case for keeping Anglo independent amid expectations that BHP may yet return with a third bid. The Australian company has until May 22 to make a final binding bid.

Other potential suitors such as Glencore and Rio Tino have all studied the possibility of making rival offers, according to reports.

BHP chief executive Mike Henry said: “BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.”

Mr Henry’s offer involves a complex two-step process whereby Anglo shareholders would first receive shares in its subsidiaries Anglo American Platinum, known as Amplats, and Kumba Iron Ore. Both are listed on the South African stock market.

After this demeger is completed, Anglo investors would then swap each share they own for 0.8132 BHP shares.

It means investors would swap UK-listed Anglo shares for three separate non-UK listed shares: BHP, Amplats and Kumba.

Anglo’s UK shareholders have previously criticised the takeover structure as unappealing.

BHP offer is all stock. A cash element may prove more appealing to Anglo shareholders.

Liberum analysts said: “Given the emphatic ‘no’ from Anglo American’s board on accepting execution risk of demergers pre-deal, it’s no surprise BHP’s revised offer was rejected.

“Clearly, a successful bid probably requires a much higher premium – one that BHP is probably unwilling to pay.”