On Friday, the mining giant Anglo American rebuffed a takeover bid from its competitor BHP Group, asserting that the proposal “significantly undervalues” the company and its future potential.
BHP, headquartered in Australia, announced on Thursday its all-share takeover offer for Anglo American, valuing the latter at £31.1 billion ($38.9 billion). If successful, the acquisition would establish the world’s largest mining company.
Despite initial losses, shares of Anglo American recovered slightly, trading down 0.2% by 10:20 a.m. London time, while other mining stocks saw gains.
In an official statement, Anglo American’s board unanimously rejected BHP’s “unsolicited, non-binding, and highly conditional” proposition.
Chairman Stuart Chambers dismissed the bid as “opportunistic,” emphasizing its failure to adequately recognize Anglo American’s prospects while diminishing the potential value for its shareholders relative to BHP’s.
The proposed offer also entailed a requirement for Anglo American to divest its entire holdings in South Africa-based Anglo American Platinum Limited and Kumba Iron Ore Limited, significant contributors to the company’s copper production.
Chambers criticized the proposed restructuring as “highly unattractive,” citing substantial uncertainty and execution risks disproportionately borne by Anglo American, its shareholders, and stakeholders.
Following the rejection, shares of Anglo American Platinum surged over 2%, while Kumba Iron Ore dipped 0.9%.
The move by BHP is seen by analysts as potentially marking the beginning of a broader consolidation phase within the mining sector, driven by the imperative to secure copper supplies amidst projected shortages and the metal’s critical role in the energy transition.
John Meyer, a partner and mining analyst at SP Angel, likened BHP’s bid to an “opening shot” in this consolidation phase, suggesting the possibility of a renewed bid for Anglo-American or, more likely, the pursuit of British-Australian miner Rio Tinto.
While Chinese firms may also enter the fray, Meyer hinted at potential interest from state-owned Chinese companies in South Africa, given the green manufacturing requirements.
In response to the rejection, Anglo-American emphasized its confidence in its current position to capitalize on the energy transition, particularly given its significant copper production and anticipated substantial value appreciation for its shareholders as market trends unfold.
