BHP Faces Deadline for Firm Offer in Potential Anglo American Takeover

BHP, the world's largest mining company, is currently under the spotlight as it considers making an official bid for Anglo American, a major global player in the mining sector. The London-listed Anglo American has disclosed that it is reviewing a "highly conditional" all-stock offer from BHP. This proposal includes a strategic restructure involving the de-merger of Anglo’s significant stakes in Anglo American Platinum (Amplats) and Kumba Iron Ore, both of which are listed in South Africa.

The board of Anglo American has stated that the offer and the proposed de-mergers are interdependent, and emphasized the uncertainty surrounding whether an offer will ultimately be made. BHP has been given a deadline until 5pm on 22nd May to either declare a definitive offer or withdraw its intent to bid. This deadline may only be extended with the approval of the Takeover Panel.

This potential acquisition comes at a time when Anglo American has faced challenges due to softening prices in several of its key business segments, such as platinum metals and diamonds. Particularly, its De Beers diamond division has struggled significantly due to a drastic drop in consumer demand towards the end of the last year, leading to a substantial inventory surplus.

Despite these challenges, Anglo American holds valuable assets in the global copper market, owning some of the most productive mines in South America. The proposed transaction, if realized, could represent the most significant shift in the mining landscape since the notable acquisition of Xstrata by Glencore in 2013.

Financial advisories for the potential deal include Centerview, Goldman Sachs, and Morgan Stanley for Anglo American, with USB and Barclays supporting BHP.