Elliott Management adds to its Anglo American stake as board mulls future BHP deal

Activist hedge fund Elliott Management has continued to lift its stake in Anglo American after the mining major knocked back BHP’s takeover offer.

Activist hedge fund Elliott Management has kept lifting its stake in Anglo American after the mining major’s rejection of BHP’s all-share takeover offer.

US stockmarket filings show Elliott Management added another 514,000 Anglo shares this week, through an equity swap, lifting its stake in the company to about 2.35 per cent.

Elliott emerged on Anglo’s register late last week, after news of the BHP offer went public, but has reportedly been building its position in the UK-listed mining house for some time.

Elliott has not yet indicated a position on the merger, but has previously taken significant positions in companies ahead of a push for asset sales and company restructuring to release shareholder value.

BHP shares continued to slide on Wednesday, closing down 71c to $42.32, giving it a market value of $215bn.

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The shares are now off 6.5 per cent since news of the proposed bid went public last week.

Anglo shares, in contrast, have climbed on speculation that BHP will be forced to improve its offer, or that a rival bid may emerge.

BHP is weighing a revised offer for the company, with the pressure also on Anglo American’s board to outline its strategy to improve its operating performance and share value after a horror 2023 that saw the company’s stock crumble.

Anglo American chairman Stuart Chambers reiterated the board’s unanimous rejection of the BHP offer at Anglo’s annual shareholder meeting on Tuesday night, Australian time.

Mr Chambers told Anglo shareholders gathered in London that UK takeover laws limited the ability of the company to say much more than in its original rejection of BHP’s opening offer – that it undervalued Anglo, and that BHP’s preferred structure, requiring Anglo to divest its stakes in South African platinum and iron ore projects put all of the transaction risk onto the takeover target.

“Having considered the proposal with its advisers, the board unanimously agreed that the proposal is opportunistic and fails to value the company’s prospects, while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders,” he said.

But Anglo confirmed it was still undertaking a strategic review of its assets, announced in February after the company booked a 94 per cent fall in annual profit, along with a series of significant asset write downs.

Mr Chambers refused to rule out supporting a revised bid from BHP, saying its board would consider any revised off from on its merits.

UK takeovers laws require BHP to make a firm offer for Anglo American by May 22, or declare its intention not to proceed with a bid.

But, as BHP’s advisers hit the road to sound out the views of major funds and shareholders, the Anglo American chairman also confirmed he would be talking to the major shareholders about their views on value and the company’s strategy.

“I will be meeting with shareholders and listening very carefully, particularly (to) the larger ones in the top 30 of the register, to hear what they feel,” Mr Chambers reportedly said.

“The board doesn’t buy or sell the company – the shareholders decide.”

As part of its £21bn ($40.5bn) takeover bid, BHP has offered 0.7097 of its shares for each Anglo share on issue. The deal is conditional on the spin-out of Anglo‘s shares in platinum and iron ore assets in South Africa to Anglo’s existing shareholders. The overall deal values Anglo shares at £31.1bn, but BHP will pay only for the assets it wants.