BHP investors support decision to abandon Anglo deal

Unlock Editor’s Digest for free

BHP’s decision to abandon a £39bn bid for rival Anglo American has been welcomed by some of its investors in Australia as attention turns to whether its UK-listed target can deliver on its plan to restructuring.

Anglo American refused to give BHP more time on Wednesday to make a formal offer, resulting in the failure of the miner’s six-week takeover attempt.

Anglo American, which dismissed BHP’s bid as “very complex and unattractive”, has proposed an alternative plan to split up, including the spin-off of two of its South African businesses.

Under London stock market rules, BHP has to wait six months before it can approach Anglo again, unless the British company invites it to do so or another bidder emerges.

Glyn Lawcock, an analyst at investment bank Barrenjoey, said investors were satisfied that BHP’s management team had exercised discipline by not raising its offer to gain approval from Anglo’s board.

He said the pressure was now on the UK-listed company to show it could close the gap between BHP’s offer and its own valuation.

“Six months is not a long time. “This is a very long game,” Lawcock said of the offer. He suggested BHP could be taking a “time out” and could launch another bid in the future.

BHP chief executive Mike Henry had his sights set on Anglo’s prized copper business, a metal critical to the energy transition. “It is a 30-year work. You are preparing the company for the next generation,” Lawcock said of BHP’s strategy.

Matthew Haupt, a portfolio manager at Wilson Asset Management in Sydney, which owns BHP shares, said he expected the world’s largest miner could return with a new offer within six months if Anglo did not show rapid progress in meeting its own plans.

“There’s no margin of error. The blowtorch is on them,” he said of Anglo’s management.

Haupt added that investors approved the strategy of the Australian company’s management. “They were talented and disciplined,” he said. “I’d rather you leave now rather than do something stupid like turn hostile.”

“BHP did the best it could,” said Kaan Peker, an analyst at RBC Capital Markets. “It’s not necessarily over. “If Anglo American returns to pre-bid levels, there will be many questions.”

BHP shares opened down 1.5 percent in Australia. Analysts said the drop reflected a broader sell-off in mining stocks, rather than a judgment on BHP’s strategy.

Investors will once again focus on BHP’s organic growth plan, including the delivery of a major copper project in South Australia following the acquisition of Oz Minerals.

Anglo’s plan includes selling its coal assets in northern Australia and a stake in a manganese business in the Gulf of Carpentaria, as well as spinning off its platinum business in South Africa and diamond mining company De Beers.

Leave a Comment