A modest increase in the bid price could have convinced Anglo to engage, one analyst says
BHP’s bid strategy for Anglo American has been called into question, with one shareholder saying a modest increase in the offer might have tipped the scales in mining giant’s favour.
Word on the street was that a “small bump” in BHP’s bid price for fellow global miner Anglo American might have convinced the target to engage and open its books, while questions are now being asked about what’s next for Anglo.
Tribeca Global Natural Resources Fund portfolio manager Ben Cleary said on Thursday that Anglo was obviously a good fit for the BHP portfolio, and the failure of the approach must be “fairly disappointing” for the company.
“They’re obviously very high conviction on Anglo, I think their shareholders were very supportive of the Anglo deal,” Mr Cleary said.
“It was obviously very much on-trend for their corporate strategy.
“So I think it must be fairly disappointing and I was surprised. It seemed very close and the feedback I was getting was that it wouldn’t have needed much more of a bump to get that engagement.”
Mr Cleary said he didn’t expect any other major transactions to rear their head in the short term for BHP.
“To pivot to something else, I think would be unlikely - to another transaction,” he said.
“But I guess they’ve somewhat shown their hand that buying over building is more accretive for them.”
Former BHP chairman Don Argus said the Anglo board would now have the task of explaining to their shareholders what better ideas they had than the proposed BHP deal.
“Everyone’s concentrating on BHP - I think everyone should be concentrating on what’s going to happen to Anglo,” he said on Thursday.
“They’ve got the benefit of the premium of the offer in their share price, I think I’d be looking at what’s going to happen there.’’
Argo Investments chief executive Jason Beddow told The Australian recently that the strength in the copper price was working against BHP.
“Timing is everything, and had they been trying to execute this six months ago, and copper still had a 3 in front of it, it might have been a very different proposition for Anglo shareholders,’’ Mr Beddow said.
“But with record high copper prices, Anglo’s probably got a lot of options themselves.
“And there’s a lot of pressure on BHP, probably from at least some shareholders, to have financial discipline and not overpay.
“Clearly they’re not going to put a $US5 copper price in their model to say ‘yeah we can pay any price for Anglo’. So I think it’s a tough one.”
Mr Beddow said his gut feel was that BHP was on balance being driven by a desire not to overpay.
“But equally these are 50, 70-year assets, and if you believe everyone on AI, data centres, decarbonisation, etc. - paying a little bit more now for some really long-life copper assets - who knows?”
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