BHP is expected to be in a far more favourable position to buy Anglo American in six months if the latter’s share price fails to trade close to BHP’s final offer that values the group at $38.6bn (A$74bn).
BHP announced after trade in London on Wednesday night that it would not make a formal bid for Anglo American which has rejected its multiple advances and now plans to break up the company.
The good news for BHP is that a planned sale by Anglo American of its $US3.3bn metallurgical coal mines in Queensland will take at least six months – the time that BHP is ruled out from returning for another play at Anglo American under British takeover laws.
It means that should it come back with another bid not long after that time frame, Anglo American’s metallurgical coal mines would not yet have been sold, and they are believed to be deemed valuable by BHP.
If there is a next time that BHP comes back for another bid for Anglo American, and if the latter’s share price is not trading well, it will unlikely be given the benefit of the doubt by its shareholders that will place strong pressure on its board to accept an offer.
This is even if it involves a deal where BHP does not take Anglo American’s platinum assets or iron ore assets in South Africa.
Should Anglo American shares fall back to around STG22 to STG23, the board and management will be left in an awkward position defending why they knocked back an offer that values the Anglo American interests at STG31.11 a share.
BHP shares in early afternoon trade were at $44.28, down 1.8 per cent.
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