Posted on 15 May 2024
United Kingdom-listed miner Anglo American has rejected Australia-listed BHP's revised £34 billion ($42.69 billion) takeover, saying the buyout "continues to significantly undervalue the firm and its future prospects," Kallanish notes.
After rejecting BHP's earlier £31.1 billion buyout proposal, Anglo American confirmed in a statement on Monday that it received a second unsolicited, non-binding and highly conditional combination proposal from BHP on 7 May. BHP had offered Anglo American shareholders £27.53 per share, up from £25.08 previously.
Aside from significantly undervaluing the firm, Anglo American says the latest proposal continues to contemplate a structure which the board believes is highly unattractive for its shareholders, given the uncertainty and complexity inherent, and significant execution risks.
It says the requirement to pursue two contemporaneous demergers creates significant uncertainty, which falls disproportionately to Anglo American shareholders.
According to Anglo American, the Anglo American Platinum and Kumba Iron Ore shareholdings, at current market value, are worth approximately $15 billion, or 34% of the proposed total consideration. This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum and Kumba Iron Ore. This creates significant uncertainty as to the delivered value as part of the proposal.
In addition, Anglo American notes that by requiring this as part of a takeover of Anglo American, it would result in additional approvals related to these two demergers. The timetable to obtain these additional approvals is expected to be lengthy. Some of these approvals may result in potential conditions being attached to the approvals, which could disproportionately impact Anglo American Platinum and Kumba Iron Ore and are not addressed in the latest proposal.
Accordingly, the board of Anglo American has unanimously rejected the latest proposal. The board is confident in Anglo American’s standalone future prospects. Anglo American has accelerated plans for delivery of its standalone strategy. Thus, Anglo American shareholders are advised to take no action in relation to this buyout.
“The latest proposal from BHP again fails to recognise the value inherent in Anglo American. Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive," says Stuart Chambers, Chairman of Anglo American.
According to him, the Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.
"The BHP proposal also continues to have a highly unattractive structure. This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover," he adds.
Source:Kallanish
