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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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Miner Anglo American has rebuffed a takeover proposal from its larger rival BHP Group, declaring that the £31.1bn offer is “opportunistic” and “significantly” too low.
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A day after the mining sector was shaken up by BHP’s approach, Anglo’s board has unanimously rejected the proposal.
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The company says:
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The Board has considered the Proposal with its advisers and concluded that the Proposal significantly undervalues Anglo American and its future prospects.
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It gives several reasons: not only is the offer too low, but Anglo isn’t impressed by the structure of BHP’s all-share proposal, citing uncertainty and complexity, and “significant execution risks”.
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Under BHP’s plan, Anglo would demerge its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to its shareholders first, before being acquired, as BHP is mainly interested in its copper mines.
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Announcing the rejection of BHP’s approach, Stuart Chambers, chairman of Anglo American, tells the City:
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“Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends.
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With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the Board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises.
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Chambers adds that Anglo American is “entirely focused” on delivering its strategic priorities.
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The company owns mines in countries including Chile, South Africa, Brazil and Australia, but a series of missteps – including disappointing production rates last year – have left it vulnerable to a takeover approach.
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But some analysts have already suggested that BHP might have to improve its offer, or that other bidders could also enter the fray with their own proposals….
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Yesterday, Anglo’s shares surged 16% and closed slightly higher than BHP’s offer (which is worth £25.08 per share). That implies the City expected the initial proposal to be rebuffed.
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Jamie Maddock, energy analyst at Quilter Cheviot, said:
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The fact that the shares are trading just above what BHP is offering suggests one of two things – either BHP is going to up its offer or sweeten the deal in some way, or a second offer comes forward from another diversified miner like Glencore.
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The deal premium feels relatively low, particularly in the context of recent M&A offers and the heightened complexity hence something above £30 per share could be likely to get it done.
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The agenda
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7.45am BST: French consumer confidence report for April
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9.30am BST: UK insolvency statistics for March
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11.30am BST: Bank of Russia interest rate decision
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1.30pm BST: PCE measure of US inflation index for March
-
3pm BST: University of Michigan indx of US consumer confidence
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Key events
Some of Anglo American’s largest shareholders should be pleased by today’s rejection of BHP Group’s offer.
Yesterday, Legal & General Investment Management (Anglo’s 11th largest shareholder) criticised BHP Group’s approach was “highly opportunistic” and “unattractive”.
Another investor, Redwheel, argued that the details of BHP’s proposal were “sketchy” and “rather opportunistic”, in view of recent weakness in Anglo’s share price.
Introduction: Anglo American rejects BHP’s takeover approach
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Miner Anglo American has rebuffed a takeover proposal from its larger rival BHP Group, declaring that the £31.1bn offer is “opportunistic” and “significantly” too low.
A day after the mining sector was shaken up by BHP’s approach, Anglo’s board has unanimously rejected the proposal.
The company says:
The Board has considered the Proposal with its advisers and concluded that the Proposal significantly undervalues Anglo American and its future prospects.
It gives several reasons: not only is the offer too low, but Anglo isn’t impressed by the structure of BHP’s all-share proposal, citing uncertainty and complexity, and “significant execution risks”.
Under BHP’s plan, Anglo would demerge its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to its shareholders first, before being acquired, as BHP is mainly interested in its copper mines.
Announcing the rejection of BHP’s approach, Stuart Chambers, chairman of Anglo American, tells the City:
“Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends.
With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the Board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises.
Chambers adds that Anglo American is “entirely focused” on delivering its strategic priorities.
The company owns mines in countries including Chile, South Africa, Brazil and Australia, but a series of missteps – including disappointing production rates last year – have left it vulnerable to a takeover approach.
But some analysts have already suggested that BHP might have to improve its offer, or that other bidders could also enter the fray with their own proposals….
Yesterday, Anglo’s shares surged 16% and closed slightly higher than BHP’s offer (which is worth £25.08 per share). That implies the City expected the initial proposal to be rebuffed.
Jamie Maddock, energy analyst at Quilter Cheviot, said:
The fact that the shares are trading just above what BHP is offering suggests one of two things – either BHP is going to up its offer or sweeten the deal in some way, or a second offer comes forward from another diversified miner like Glencore.
The deal premium feels relatively low, particularly in the context of recent M&A offers and the heightened complexity hence something above £30 per share could be likely to get it done.
The agenda
-
7.45am BST: French consumer confidence report for April
-
9.30am BST: UK insolvency statistics for March
-
11.30am BST: Bank of Russia interest rate decision
-
1.30pm BST: PCE measure of US inflation index for March
-
3pm BST: University of Michigan indx of US consumer confidence