UK-based mining company Anglo American has rejected a revised “unsolicited and non-binding” buyout offer rival Australian miner BHP Group, which values the former at around £34bn.
BHP made the second all-share offer with an increased number of BHP shares for Anglo American shareholders last week.
According to the board of Anglo American, the second takeover bid too significantly undervalues the company and its future prospects.
In addition, the offer proposes a structure that is highly unattractive for Anglo American’s shareholders, said the company’s board.
Besides, BHP’s bid is said to be associated with uncertainty and complexity along with substantial execution risks.
Furthermore, the necessity for two simultaneous demergers introduces considerable uncertainty, disproportionately impacting Anglo American shareholders.
Anglo American’s board has also asked its shareholders to refrain from taking any action regarding the offer.
Anglo American Chairman Stuart Chambers said: “The latest proposal from BHP again fails to recognise the value inherent in Anglo American.
“Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world-class resource endowments ever more attractive.
“The Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.”
As per the revised proposal, shareholders of Anglo American will receive 0.8132 BHP shares for each ordinary share they own in Anglo American. They will also get ordinary shares in each of Anglo American Platinum and Kumba Iron Ore.
The second proposal, similar to the initial offer, is conditional upon the pro-rata distribution by Anglo American of its entire interests in Anglo American Platinum and Kumba Iron Ore to its shareholders before the completion.
At current market value, the Anglo American Platinum and Kumba Iron Ore shareholdings are worth nearly $15bn and 34% of the proposed total consideration.
BHP CEO Mike Henry said: “BHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.
“The revised proposal represents a 15% increase in the merger exchange ratio and increases Anglo American shareholders’ aggregate ownership in the combined group to 16.6% from 14.8% in BHP’s first proposal.”
