Anglo American Skeptical of BHP’s $39 Billion Takeover Offer Amid Investor and Analyst Doubts

Anglo American Skeptical of BHP’s $39 Billion Takeover Offer Amid Investor and Analyst Doubts

Anglo American’s management team has expressed reservations about a $39 billion takeover bid from BHP Group, deeming the offer unattractive, according to sources familiar with the matter. The bid, which proposed a purchase price of 25.08 pounds ($31.39) per share—a 31% premium over Wednesday’s market close—has been criticized by some investors and analysts as opportunistic.

Key concerns raised include the complexities involved in demerging Anglo American Platinum and Kumba Iron Ore businesses in South Africa, which the offer from BHP does not adequately address. BHP has been given a deadline of May 22 to submit a binding bid.

The proposed merger would result in a conglomerate controlling approximately one-tenth of the global copper output, a strategic move as demand for the metal grows due to its applications in electric vehicles and emerging technologies.

Amidst this takeover bid, Anglo American is also vigorously pursuing a strategic review of its assets, initiated in February following a significant drop in annual profit and a series of asset writedowns due to declining commodity demands.

In addition to exploring corporate restructuring, Anglo American has engaged RBC Capital Markets to start syndicating its Woodsmith fertiliser project in northeast England, seeking partners to share the hefty $9 billion capital expenditure. The company is also reportedly seeking partners for its De Beers diamond business, which BHP has indicated it would reevaluate post-acquisition.

Analysts have suggested that Anglo American’s assets might be better suited to other major mining companies like Rio Tinto and Glencore, hinting that BHP’s initial offer may prompt competing bids. Both Rio Tinto and Glencore have declined to comment on any potential interest in Anglo American.

Comments from industry experts and stakeholders suggest that the offer, while substantial, may not be sufficient to persuade Anglo American’s board and shareholders, highlighting the strategic and financial complexities of such a significant merger in the mining sector. icon

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