Anglo American rejects BHP’s revised US$43B proposal

Anglo American (LSE: AAL) rejected BHP’s (NYSE: BHP; LSE: BHP; ASX: BHP) latest bid on Monday, which valued the company at US$42.7 billion, stating it was “highly unattractive” for its shareholders.

The new offer was 10% higher than BHP’s first one, or a 15% increase in the merger exchange ratio, lifting Anglo American shareholders’ aggregate ownership in the combined group to 16.6% from 14.8% in the earlier proposal.

“…The latest proposal continues to contemplate a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent, and significant execution risks,” the London-listed miner said in a statement.

The revised bid was still contingent upon Anglo selling its shares in iron ore and platinum assets in South Africa.

In April, Anglo American rebuffed a US$39-billion all-share offer, stating it was opportunistic and significantly undervalued its prospects.

A merger would grant BHP approximately 10% of global copper production, enhancing its presence in leading copper-producing nations such as Chile and Peru.

Through the acquisition of Anglo American, BHP would secure ownership in four of the world’s largest copper mines — Collahuasi (44% ownership), Los Bronces (50.1%), El Soldado (50.1%), and Quellaveco (60%). This move would increase the company’s copper exposure by approximately 40%.

“We are disappointed that this second proposal has been rejected,” BHP’s CEO Mike Henry said in a statement.

“BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders,”

BHP has until May 22 to log a binding offer.

Meanwhile, shareholders of Anglo American are urging the company to accelerate the release of its turnaround plan, according to Bloomberg.

They want the company to clarify how it could generate more value than simply selling to a competitor.

Shares of Anglo American fell 1.3% by 11:10 a.m. ET. The miner has a market capitalization of £36.6 billion (US$45.97 billion). BHP traded 0.4% higher at the same time, with a market cap of US$143.7 billion.