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BHP drops Anglo American takeover bid as shareholder support ebbs

Mining giant BHP Billiton logo sits on the outside of their head office in Melbourne, Australia, Thursday, Nov. 27, 2008.
Mining giant BHP Billiton logo sits on the outside of their head office in Melbourne, Australia, Thursday, Nov. 27, 2008. Copyright AP Photo/Scott Barbour, File
Copyright AP Photo/Scott Barbour, File
By Indrabati Lahiri
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BHP's bids have been called "unattractive" by Anglo American, who has said that they expose its shareholders to undue risk and uncertainty.

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BHP and Anglo American have finally ended weeks of tense negotiation talks, with BHP recently pulling out of the takeover deal after three rejected bid proposals. 

Anglo American, which refused to further extend the deadline for BHP to come back with a revised fourth proposal, left BHP with little choice under British law but to withdraw and not offer again for at least six months. 

Some of BHP's conditions for the takeover included Anglo American needing to divest its businesses in South Africa, such as Anglo American Platinum and Kumba Iron Ore. The requirements had already faced major backlash from both the South African government, which has a significant stake in Anglo American, and the company itself. 

BHP not enthusiastic about bid

Although BHP did try to come back with a revised proposal promising to appease South African politicians and investors, as well as project staff at Anglo American's Johannesburg office, this was clearly not enough. 

Previously, Anglo American had highlighted that BHP's offers were "unattractive" for its shareholders and exposed them to higher levels of risk. 

Following BHP's withdrawal, Anglo said in a statement: "On 28 May 2024, BHP put forward a limited number of socioeconomic measures that were confined in scope, impact and duration and that BHP stated would support regulatory approvals. 

"This approach does not sufficiently address the fact that Anglo American's shareholders would bear disproportionate execution and value risks and uncertainty over an extended period, nor does it consider that material conditions would likely be imposed in relation to both Anglo American Platinum and Kumba which would require the approval of their respective boards."

Mike Henry, chief executive officer (CEO) at BHP said, in a statement: "BHP will not be making a firm offer for Anglo American. BHP is committed to its Capital Allocation Framework and maintains a disciplined approach to mergers and acquisitions. 

"While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost. 

"Despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive. 

"We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa."

Following Anglo American's rebuttal, BHP could potentially look towards other key mining companies such as Antofagasta and Lundin Mining, based in Canada. Both companies have copper mines in Chile, where BHP's Pampa Norte mines are also located. 

The company is also likely to focus on its own expansion avenues, such as its copper mines in Chile and Australia, and its iron ore assets. 

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