Anglo American has dismissed a new buyout proposal from BHP Group, which valued the business at £34bn ($42.7bn), maintaining that the offer significantly undervalues the company and its future prospects.
The board of Anglo American has reiterated its previous stance against BHP's latest acquisition attempt, whose structure remains unchanged from the initially rejected proposal of last month.
The new offer would have seen Anglo American shareholders receive 0.8132 BHP shares for each share held, alongside shares in Anglo American Platinum and Kumba Iron Ore as part of a demerger process.
Each Anglo American share is worth £27.53 under the revised bid, up from £25.08 earlier. The new offer also raises Anglo American shareholders' aggregate ownership in the merged entity to 16.6% from 14.8% in the initial bid.
The board expressed concerns over the proposal's structure, which it finds unappealing due to the uncertainty, complexity and significant risks involved in executing the required demergers.
It believes these risks will have to be disproportionately borne by Anglo American shareholders.
This decision follows discussions with shareholders and stakeholders since BHP's intentions were made public.
The London-listed miner further said that its Anglo American Platinum and Kumba Iron Ore shareholdings are valued at around $15bn and 34% of the total proposed consideration.
“This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum Limited and Kumba Iron Ore Limited. This creates significant uncertainty as to the delivered value as part of the proposal,” it stated.
Moreover, the takeover would necessitate additional approvals for the demergers, potentially extending the timeline and introducing further conditions that could adversely affect Anglo American Platinum and Kumba Iron Ore.
These potential impacts have not been addressed in BHP's latest proposal.
In light of these considerations, Anglo American board has unanimously decided to turn down BHP's latest proposal.
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.”
