‘Blowtorch is on Anglo’, say Australians in BHP aftermath

AUSTRALIAN investors said BHP might consider a fresh takeover attempt of Anglo American, especially if the UK-listed firm’s restructuring failed to inspire its share price.

The Financial Times quoted Glyn Lawcock, an analyst with Barrenjoey as saying BHP shareholders were pleased their company’s management showed restraint by declining to make a higher offer for Anglo on Wednesday.

He said the pressure was now on the UK-listed company to prove that it could bridge the gap between BHP’s offer and its own valuation. “Six months is not a long time. This is a very long game,” said Lawcock. He suggested BHP might be taking a “time out” and could launch another bid in the future.

Shares in Anglo American were 3.67% lower during the first few hours of trade on the Johannesburg Stock Exchange.

After a frantic day, BHP announced it would not make a firm offer for Anglo after having three all-share takeover proposals rejected. BHP claimed it had not had sufficient time to explore Anglo’s claims BHP’s deal structure put its shareholders disproportionately at risk.

In terms of its proposals, BHP wanted Anglo to first unbundle its shares in Johannesburg-listed companies Anglo American Platinum and Kumba Iron Ore before launching a takeover. Anglo argued the complexity of these inter-related transactions was unprecedented and that there’s was no guarantee they would be completed.

In terms of London’s put up or shut up rule regarding takeovers, BHP cannot renew takeover proceedings for Anglo for another six months. In the absence of a takeover offer from a third party, this would give Anglo the time to launch its own restructuring plans. Detailed by CEO Duncan Wanblad earlier this month, this involved the managed unbundling of Amplats, sale of De Beers and sale of the firm’s Australian metallurgical coal mines.

“There’s no room for error. The blowtorch is on them,” said Matthew Haupt, portfolio manager at Wilson Asset Management of Anglo’s restructuring. Commenting on BHP’s decision to walk from a takeover, he said: “They had a crack and exercised discipline. I’d rather they walked away now rather than doing something stupid like going hostile.”

“BHP put its best forward,” said Kaan Peker, an analyst with RBC Capital Markets. “It’s not necessarily over. If Anglo American trades back to the pre-bid levels then there will be a lot of questions.”