BHP makes new takeover approach to Anglo American: report

BHP Group has made a fresh takeover approach to Anglo American in a move to disrupt the London-listed miner’s combination with Canada’s Teck Resources, the latest twist in a wave of consolidation sweeping the industry.

The world’s biggest miner has made overtures to Anglo American in recent days, according to people familiar with the matter. BHP’s proposal is a mix of cash and stock, some of the people said. Anglo American has a market value of about £31.9 billion ($64.7 billion), while BHP — which tried unsuccessfully to buy the smaller company last year — has a market value of more than $US130 billion.

For BHP and CEO Mike Henry, the move will represent a test of how far the company is willing to go in its efforts to grow in copper.Credit: Bloomberg

BHP’s new approach comes less than three weeks before shareholders from Anglo and Teck are scheduled to vote on their deal to create a new copper giant worth more than $US60 billion combined, announced in September. The move extends a years-long dealmaking boom that has gripped the biggest miners — largely driven by a desire to expand in copper, which is seen as increasingly critical for its role in electrification.

The deliberations are ongoing and there’s no certainty they will lead to a deal between BHP and Anglo, said the people, who asked not to be identified discussing private information. Anglo informed Teck over the weekend about the BHP approach, two of the people said. Representatives for BHP, Anglo and Teck declined to comment.

Like Teck, Anglo has long been seen as a potential takeover target for the industry’s biggest players because of its attractive copper portfolio. However, buyers had largely been put off by Anglo’s eclectic mix of other relatively niche assets stretching from diamonds to platinum.

BHP tried to acquire Anglo for $US49 billion last year in a complicated deal that required the smaller company to partly break itself up first by spinning off majority stakes in two South African miners, but BHP eventually walked away following a five-week public battle.

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Anglo repeatedly rejected BHP’s proposals at the time as too complex and undervaluing its business, and instead rushed out a sweeping restructuring plan that chief executive officer Duncan Wanblad promised would offer better returns to shareholders. The company has since exited its South African platinum business — potentially making it more digestible to BHP — although it has yet to seal plans to divest its coal and diamonds units.

BHP’s latest proposal was structured in a simpler and more straightforward way than last year, some of the people said.

Anglo’s shares have significantly outpaced BHP’s since the talks ended, which could make it more difficult to reach any agreement on a valuation. The smaller company’s shares have risen 11 per cent in London, while BHP dropped by 10 per cent in Australian trading.

The deal with Teck has also received broad-based support from Anglo investors.

BHP’s new approach comes less than three weeks before shareholders from Anglo and Teck are scheduled to vote on their deal to create a new copper giant worth more than $US60 billion combined.Credit: Bloomberg

For BHP and CEO Mike Henry, the move will represent a test of how far the company is willing to go in its efforts to grow in copper. BHP and its rivals have remained wary of overpaying after being severely punished by investors following disastrous deals during the last cycle.

The BHP boss is also contending with a mounting dispute over iron ore sales to his most important customer, China, while some people close to the company expect him to hand over to a successor next year after six years in the CEO role.

While Anglo was successful in rejecting BHP’s overtures last year, the battle prompted the company to investigate alternatives that culminated in the September agreement to buy Teck, which itself would be one of the industry’s largest-ever acquisitions.

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The deal was presented as a zero-premium transaction, and Teck and Anglo have said they can unlock significant value by combining their two huge and neighbouring copper mines in the Atacama desert.

The companies said at the time their agreement included provisions that would allow either firm to consider unsolicited proposals and for the deal to be terminated in the event of a superior proposal.

Bloomberg News reported last week that Canada is putting pressure on Anglo to make stronger commitments to executive and management jobs at its proposed Vancouver headquarters as a condition of taking over Teck, which currently has a market value of about $US19 billion.

Shareholders of both miners are set to vote on December 9 and the deal still needs the approval of regulators in countries including China, the US and Canada. Any BHP-Anglo combination would also likely face significant antitrust scrutiny, especially in China.

Bloomberg

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