BHP calls for further extension to Anglo takeover talks

BHP on Wednesday called for a further extension to takeover talks with Anglo American after failing to convince the UK-listed group of plans to derisk the all-share proposal.

Outlining a raft of measures, many of them socio-economic as well as an unquantified “reverse break fee”, the Australian miner said in a statement to the Australian Stock Exchange: “BHP believes the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the combination”.

“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal,” it added.

It stopped short of making an offer, however ahead of the 5pm London deadine today. Shares in BHP edged up 0.24% on the Australian Stock Exchange.

“Anglo’s engagement to date has been limited rather than fulsome,” a person close to BHP said today.

Anglo American has rejected three proposals from BHP, the last on May 22 valuing Anglo at £29.34 per share on its undisturbed price (April 23). However, Anglo extended the ‘put up, shut up’ (PUSU) deadline a week to discuss the proposal.

Each proposal has asked Anglo to first unbundle its Johannesburg-listed shares in Anglo American Platinum (Amplats) and Kumba Iron Ore – a step that Anglo believes will result in heavy selling of the shares by non-South African owners.

Anglo also says BHP’s proposal will require lengthy approval from South African authorities, including support from the Competition Commission which includes public impact studies – a concern BHP sought to address during the last week’s talks.

The Australian miner unveiled today measures that included keeping Anglo’s Johannesburg office open for three years, imposing a freeze on job cuts at the office, and a reverse break-free payable to Anglo should the takeover ultimately fail.

It also offered to sustain Anglo’s charitable and social interventions. But it made no adjustment to the share ratio or structure requiring the unbundling of the South African listed subsidiaries. “It is the same Christmas tree, with different tinsel,” a source close to Anglo said.

Reports emerged last night that the parties were struggling to reach an agreement in discussions. “Unless BHP has shown it is willing to compromise on the structure, I don’t see how Anglo’s board can recommend this offer,” said the Financial Times citing one person close to Anglo American. 

BHP source told the newspaper: “What’s interesting here is Anglo hasn’t come out and said there is a fatal flaw to this transaction”.

Wednesday’s deadline, which was selected by Anglo, coincides with South Africa’s national election, adding an extra layer of political complexity, said the Financial Times.