Anglo American announced that its board has unanimously rejected BHP’s third unsolicited, non-binding takeover proposal.
The latest proposal from BHP valued Anglo American at approximately £29.34 (A$56.40) per share, based on undisturbed share prices at market close on 23 April 2024.
When considering the 30-day and 90-day volume-weighted average share prices, the valuation would be £29.91 and £29.67 per share, respectively.
As per the terms of the latest proposal, for each share owned, Anglo’s shareholders would get 0.8860 BHP shares, and ordinary shares in Anglo American Platinum and Kumba Iron Ore.
Anglo American’s board stated that latest proposal also has a highly complex structure, similar to those previously rejected on 26 April 2024 and 13 May 2024.
The proposal involved an all-share offer that would require Anglo American to complete two different demergers of its full shareholdings in Anglo American Platinum and Kumba Iron Ore to its shareholders.
The Anglo American Board expressed serious concerns regarding the proposal’s structure, which would likely lead to significant completion risks and adverse value impacts for Anglo American’s shareholders.
The suggested structure and related risks have been the main topics of discussion between the board and its advisors and BHP and its advisors on a number of occasions.
The board noted that the proposed all-share offer and required demergers are inter-conditional, a complexity that the board believes is unprecedented and would necessitate additional approvals, particularly in South Africa.
Contrasting BHP's proposal, Anglo American has a simpler stand-alone plan to accelerate value delivery, which was announced on 14 May 2024, including a single demerger of Anglo American Platinum.
The board considers this plan less risky and more efficient.
According to Anglo American, the complex process proposed by BHP is likely to take 18 months or more to finish and comes with significant execution and completion risks with regard to value and time. The main aspects of Anglo American's stand-alone plan to speed up value delivery are expected to be substantively complete by that stage.
The board also raised concerns about the potential approval conditions that could be imposed due to BHP's proposal, which would disproportionately affect Anglo American Platinum and Kumba Iron Ore, and consequently, Anglo American's shareholders.
Despite the rejection, the Anglo American board has extended the deadline for BHP to make a formal offer until 29 May 2024, to allow further engagement on risk mitigation and value impact concerns.
Anglo American chairman Stuart Chambers said: “The Board considered BHP's latest proposal carefully, concluded it does not meet expectations of value delivered to Anglo American's shareholders, and has unanimously rejected it.
“In particular, it does not address the Board's concerns about the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American's shareholders.
“Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues.
"However, the Board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one week extension to the PUSU deadline, which has been consented to by the panel."
