BHP ‘won’t be waiting around to rescue Anglo’ if things go wrong
BHP won’t be riding to Anglo American’s rescue if its restructure plan goes wrong, the Australian mining giant wants to make clear.
BHP won’t be sitting in the wings waiting to rescue Anglo American if its radical self-help plans go badly, the mining giant is warning shareholders of both groups.
The message comes after BHP walked away from its $74bn all-scrip takeover offer for Anglo overnight on Wednesday, blaming the Anglo board’s refusal to discuss options around the divestment of the company’s South African iron ore and platinum assets for its decision.
Instead Anglo chairman Stuart Chambers told shareholders the company had elected to follow the “clear pathway” laid out by chief executive Duncan Wanblad in Anglo’s hastily accelerated plan to resurrect its own fortunes after a horror year in 2023.
Under the plan, the company will sell its Queensland metallurgical mines, spin-off its platinum assets, put its nickel operations into care and maintenance, divest or demerge its interests in diamond behemoth De Beers and suspend the development of its huge Woodsmith potash project in the UK.
The restructure, which Mr Wanblad estimated would take two years to complete, would leave Anglo as a dramatically slimmed down company built around its South American copper mines and its iron ore interests in South Africa and Brazil.
While there are doubts about Anglo’s ability to execute on the plan, the radical restructure – combined with the early leak of BHP’s offer to Anglo and the restrictive UK takeovers laws – were enough to fend BHP off in its first round of offers.
After Anglo’s initial rejection of merger talks in mid-April, BHP had pinned its strategy on winning the support of joint Anglo and BHP shareholders to pressure the company’s board to engage in direct discussions.
Despite UK takeovers laws effectively barring BHP from bidding again for at least six months, the Australian mining behemoth retains the ability to make a single confidential approach to the Anglo board in the period – with the permission of the UK takeovers board – or to make a further offer for the company if a rival bidder emerges.
Some Anglo shareholders – including Tribeca Global Natural Resources Fund portfolio manager Ben Cleary – have expressed a view that BHP could have gotten a bid over the line with just another small bump, and expectations remain in some parts of the market that BHP could return, particularly if the wheels fall off Mr Wanblad’s restructuring plans.
But, having drawn a hard line on the amount of its own scrip BHP was prepared to offer for Anglo – as well refusing to budge on its demands that Anglo shed its South African assets – BHP is now believed to be telling key shareholders they should not assume it will ride to the rescue if Mr Wanblad fails, with the company keen to move on and lay out its own plans for the future, particularly around its copper assets.
They include a major reset of the expansion plans for the giant Escondida mine in Chile, due for release in November, along with the potential for an acceleration of progress at the Resolution copper project in the US, which BHP owns with Rio Tinto.
BHP is also drawing up plans for the expansion of its South Australian copper operations, which it is integrating with those acquired through its takeover of OZ Minerals.
BHP’s senior leadership team believe Anglo’s board used its criticism of BHP’s proposed deal structure as a regulatory defence, and had no real intention of negotiating a friendly takeover agreement.
Anglo rejected BHP’s latest sweetened offer just over a week ago, dropping complaints the offer undervalued its copper and coking coal assets, but saying its board had unanimously rejected the latest bid due to concerns its shareholders would wear all of the risks of spinning out its shareholdings in Amplats and Kumba Iron.
In a release to the markets on Wednesday, BHP said it had offered direct responses to Anglo’s major concerns – including an offer of a three-year guarantee to the South African government to maintain staffing levels in the country, sharing any costs of employee share schemes required under South Africa’s public interest test negotiations, and establishing a mining centre of excellence in the country to train mine workers and to conduct research and development.
BHP shares closed down 78c at $44.30 on Thursday.
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