(Nov 24): BHP Group has walked away from a fresh takeover approach for Anglo American Plc, ending an unexpected and short-lived attempt by the world’s largest miner to thwart a planned tie-up between its smaller rival and Canada’s Teck Resources Ltd.
BHP confirmed on Monday that it had held preliminary discussions with Anglo, but said it was now “no longer considering a combination of the two companies”.
The regulatory statement followed a Bloomberg News report on Sunday that BHP — which had already failed in a bid for Anglo last year — made a new overture in recent days. Anglo rejected that new approach, according to people familiar with the situation, having reviewed the proposal and decided that it was not superior to the combination with Teck. The people asked not to be named as the discussions were private.
BHP’s renewed interest speaks to pressures on an industry eager to add scale and growth, especially in copper, a metal where supply has been dwindling and demand is expected to rise as the world electrifies. The mining giant’s overture comes just weeks before shareholders from Anglo and Teck — two long-standing, copper-rich targets — are scheduled to vote on their own deal to create a company worth more than US$60 billion ($78.48 billion).
“Unease that a combined Anglo-Teck entity could slip out of reach as a future target” may have driven BHP’s second approach, Bloomberg Intelligence analysts Alon Olsha and Grant Sporre wrote, adding that a renewed bid will likely have caught shareholders off guard.
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BHP shares rose as much as 1.3% in Sydney on Monday before paring some gains, as investors digested news of the approach and its subsequent abandonment. At 11:11am local time, the stock was up 0.3%.
BHP’s earlier, 2024 proposal had required Anglo to partly break itself up. The latest plan was structured in a simpler way, the people said, and Anglo has since exited its South African platinum business — potentially making it more digestible to BHP.
Still, since BHP’s last dalliance with Anglo ended, its shares have fallen in Australian trading, while the smaller company’s shares have risen 11% in London. The deal with Teck has also received broad-based support from Anglo investors.
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“Maybe BHP thought there was still an opportunity to squeeze in,” said Glyn Lawcock, head of metals and mining at Barrenjoey Markets Pty Ltd. He added that BHP now had to focus on its big-ticket copper investments, including at its giant Escondida mine in Chile, at the Vicuna venture in Argentina and at operations in South Australia.
BHP said in its statement on Monday that it continued to believe that a combination with Anglo “would have had strong strategic merits and created significant value for all shareholders.” But, the company added, it was “confident in the highly compelling potential of its own organic growth strategy.” It did not provide details of any specifics put to the target’s board.
Lazard Inc, UBS Group AG and Barclays Plc acted as advisers to BHP on their latest approach.
Anglo declined to comment. Teck and Anglo shareholders are set to vote on Dec 9 and the deal still needs the approval of regulators in countries including China, the US and Canada.
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