Anglo American’s breakup is overdue. BHP must have seen it coming | Nils Pratley

Get rid of the bad bits, keep the good ones. Anglo American’s defence strategy cannot be called original – especially as half of it is borrowed from the approach of the would-be bidder, BHP. One could also ask why, since Anglo has been simplifying itself for about two decades already, its board required the heat of a £34bn takeover battle to discover more urgency.

But there is a genuine plus in the mix: Anglo’s breakup plan is plainly more radical than anything it has attempted in the recent past. It also achieves the first requirement of a quasi-defence document by putting the onus on the bidder to come up with a real bid or shut up.

BHP, if it wants to own Anglo’s best assets, will have to table a clean offer for the whole collection, as opposed to making a complex approach to own two-thirds of the company as long as the defender demerges the unwanted other third beforehand. In a showdown between the two “complicated” breakup visions for Anglo’s short-term future, the defender’s plan looks superior: clean the decks first and then, if returns are still inadequate in a few years’ time, a conventional bid battle can be allowed to happen.

The assets deemed by Anglo as worth retaining are copper, iron ore and crop nutrients – the last being the planned fertiliser mine under the North York Moors, which was acquired in 2020 and is the only “Anglo” part of Anglo aside from the head office. As a portfolio, yes, two of those parts make sense. Copper is the go-to metal for electrification of the world’s energy systems; iron ore never goes out of fashion.

The loose element is the Woodsmith mine near Whitby, which has been a money pit to this point. Anglo now says it will slash investment to zero in 2026 to protect its balance sheet. When will first production happen? Answers are noncommittal. That is the weakness in the plan: even with the offloading of other assets, the group is still muttering about recruiting “one or more strategic partners” to help fund a “multigenerational resource”.

But there’s not much to complain about in the exit corner. Anglo American Platinum, which already has a separate listing in Johannesburg, will be demerged; nickel put on “care and maintenance”; the 85% stake in diamond giant De Beers will be sold; coking coal in Australia is also up for grabs. None of that is problematic because most of those assets are reasons why Anglo’s shares labour under a conglomerate discount. BHP, which would have kept the coking coal in Queensland, might be interested in that asset. Some sovereign wealth fund or other might want De Beers.

The future-looking question is how long Anglo will take to complete its rejig. The chief executive, Duncan Wanblad, reckons most of the job will be done by the end of 2025, which would count as reasonably slick if achieved. At that point, Anglo would be in a position where it would either perform for its shareholders or represent a cleaner takeover target.

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The immediate question is whether BHP comes back with a fresh approach. The market’s guess was no, which is why Anglo’s shares fell 3% on Tuesday. But it would be an odd tactic on the part of the BHP boss, Mike Henry, to make a weird-looking initial offer and then bow out when Anglo adopts a predictable breakup defence. Henry has either played this all wrong, or else he’s yet to show his true cards.

The Guardian

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