GIVEN Anglo American has fruitlessly undertaken “multiple engagements” with BHP, which remains firmly committed to its proposed takeover structure of Anglo, it’s a wonder the two believe a week of discussions will yield a positive outcome.
Yet here we are.
Importantly, it’s Anglo’s shareholders who believe there’s merit in discussions, or they wouldn’t be convened. The hope will be Anglo can extract a value adjustment from BHP such as a cash sweetener to underpin the risks of first spinning out Kumba Iron Ore and Amplats, the platinum miner.
Another option would be for BHP to retain Anglo’s stake in Kumba until after the takeover, to be unbundled at a later stage (as indeed it will be obliged to do in terms of anti-trust regulations) just as BHP might still sell or demerge De Beers at a later stage.
The higher BHP goes, the more likely Anglo shareholders will put up with the regulatory headache of BHP’s takeover process, the less likely BHP shareholders will like the deal.
Analysts are divided as to how the matter will play out when the next PUSU deadline falls due on May 29 (coincidentally, the day South Africans take to national polls).
“On balance, we believe the chance is that BHP bid fails, but it’s on a knife edge,” concludes Berenberg analyst, Richard Hatch.
Were Anglo’s board to recommend BHP’s next offer – viewed now as more likely by New York bank Jefferies – there is still the chance of interloper participation. Who else might step in, the bank’s analysts ask?
“We have long believed that Glencore and Anglo make a compelling strategic combination, and it would be a surprise to us if BHP acquires Anglo without Glencore at least attempting to get involved in some way, shape or form,” it says.
The bottom line is ‘watch this space’. “This is not over yet.”
