Anglo American rejects BHP’s 11th-hour bid to extend $49 billion takeover talks

Chris Ratcliffe | Bloomberg | Getty Images

LONDON — Anglo American on Wednesday rejected a request from BHP Group to extend takeover talks as the deadline for discussions looms later in the session.

The British miner said BHP’s latest bid failed to address the board’s “fundamental concerns relating to the disproportionate execution risk” surrounding the deal, and that an extension beyond Wednesday’s deadline would not be granted.

The rival miners have until 5 p.m. London time Wednesday to reach an agreement following a week-long extension of last week’s deadline.

BHP requested a further prolongment of talks earlier in the session, saying it “believes a further extension of the Deadline is required to allow for further engagement on its proposal.” It noted that it had proposed a number of “socioeconomic measures” to address concerns over its bid, but added that more time was needed for discussions.

Anglo American responded that its board “unanimously concluded that there is no basis for a further extension to the [Put Up or Shut Up] deadline.”

BHP’s latest offer values the company at £38.6 billion ($49.2 billion), according to previous Reuters calculations.

Shares of Anglo American fell 2.2% at market open, before paring losses slightly to trade down 1.3% at 10:36 a.m. London time. BHP stock rose 1.9%.

BHP Group’s bumper takeover proposal is part of an effort to create a copper mining juggernaut and capitalize on the base metal’s critical role in the green energy transition.

Anglo rejected BHP’s previous offers, saying they undervalued the company and its prospects.

The British miner has also raised concerns over demands for it to de-merge from two of its South African entities, which company Chairman Stuart Chambers previously said would create “substantial uncertainty” and executive risk for the company.

The socioeconomic provisions outlined in BHP’s latest offer include investment in a mining research and development facility in South Africa, local employment guarantees and charitable contributions.

It remains unclear whether the proposals will be enough to push the needle on what would be the first mining mega-deal in years.

“It’s a 50-50 right now in my view,” John Meyer, partner and mining analyst at SP Angel, told CNBC’s “Street Signs” on Wednesday.

BHP’s latest proposal does not constitute a formal bid, but Meyers said it was likely that Anglo would need to express agreement before a final offer is made.

“The pressure is on Anglo American to accept an offer. At that point, I think, BHP would then formalize the offer,” he noted.

Anglo earlier this month announced plans to spin off its highly prized De Beers diamond unit, as well as its steelmaking coal, nickel and platinum businesses, as part of a sweeping restructuring of its 107-year-old business.

Anglo CEO Duncan Wanblad said the restructuring was part of existing efforts to “streamline the business and provide greater value to shareholders.” However, he noted that the timeline had been sped up in the face of BHP’s advances.

The takeover offensive paves the way for a return of mega-deals after more than a decade of quiet in the mining industry. Copper’s recent rally has also heightened demand in the space, with BHP rival Rio Tinto similarly expanding its business in the base metal.

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