Time Running Out for BHP's Anglo American Bid

• BHP has been hiking its bids for Anglo American over the past month after making an initial unsolicited $31bn offer for the firm in April, which was rejected.
• Any further bid will now be forced from the firm before a 5pm deadline set under UK takeover rules, meaning BHP has just hours left to table an increased offer or back off for at least six months.
• London-listed Anglo American has been forced to accelerate its own break-up plans to quell its investors.

The clock is counting down on BHP’s takeover swoop for Anglo American today as the Australian miner is left with just hours to table an improved offer or walk away.

BHP has been hiking its bids for Anglo American over the past month after making an initial unsolicited $31bn offer for the firm in April, which was rejected.

Last week, the Sydney-listed miner lifted that to £34bn but retained its condition that Anglo American carve off its iron ore and platinum business, in an offer that was roundly rebuffed as “highly unattractive” by Anglo American.

Any further bid will now be forced from the firm before a 5pm deadline set under UK takeover rules, meaning BHP has just hours left to table an increased offer or back off for at least six months.

London-listed Anglo American has been forced to accelerate its own break-up plans to quell its investors and last week announced a carve off of its De Beers diamond operation, platinum division Amplats, and its coal steel-making business.

While Anglo’s copper mines are seen as its prized asset, the calls to ditch its iron ore business by BHP have proved contentious due to its deep roots in the South African economy and a stake held by the government.

The South African government owns a seven per cent stake in the company through its Public Investment Corporation and has come out firmly against the proposed takeover since it was revealed last month.

“Nobody here views this deal favourably,” said James Lorimer, the shadow minister for mining and natural resources. “Anglo American’s business here was once the jewel in the crown of South Africa’s economy. Under this deal it could be sold off for parts from someone else’s company.”

After Anglo American revealed its break-up plan last week, South Africa’s Public Investment Corporation (PIC) said it was considering whether to back the move and stressed the “mining sector remains a critical part of the South African economy”.

The break-up plans have also been backed by top investor Legal & General Investment Management, which owns a 1.8 per cent stake in the firm.

Nick Stansbury, head of climate solutions at Legal & General Investment Management (LGIM), said the plan outlined by the London-listed miner was “a radical but attractive strategy to create value for long-term investors”.

LGIM owns 1.8 per cent of Anglo American as well as 0.8 per cent of BHP.

Major shareholders in Anglo American are reportedly open to accepting a simpler takeover bid from its bigger rival BHP, however.

Top-ten Anglo American investor Ninety One, which holds a two per cent stake in the £36bn firm, said today the turnaround plans could simplify the business and make it a more tempting asset for a number of industry buyers int he future.

“The plan today creates a longer term way of shrinking and right-sizing the Anglo portfolio, which means it might be interesting for a lot of different mining houses in 12 months time or 18 months time,” Dawid Heyl, a portfolio manager at Ninety One, told City A.M.

“There could be other bidders if it’s a smaller, more digestible entity.”

By Charlie Conchie via CityAM

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