Anglo American has agreed to enter talks with rival BHP today despite rejecting its latest £38.6bn bid, potentially paving the way for the mining mega-merger to get over the line.
The latest bid marked a £4bn uplift from its previous rejected offer last week but retains the condition that Anglo carve off its platinum business and South African Kumba operation, which has triggered pushback from the firm and the South African government.
Today’s offer marks a 47 per cent on Anglo American’s valuation on its last day of undisturbed trading in April, prior to the news of BHP’s first bid.
While Anglo has rejected the latest offer as overly “complex”, the firm has said it is willing to engage with the company and has now extended a takeover deadline until 5pm next Wednesday.
“Since the submission of the revised proposal, we have been engaging with Anglo American and its advisors to help mitigate the concerns associated with the implementation of this structure that led to the rejection of the revised proposal,” BHP said in a statement.
“We have made progress on these topics over the course of the engagement so far, and we are hopeful that resolution will be reached in the next seven days.”
In a statement today, Anglo said the latest offer did not address its concerns over “complexity, execution risks, an extended timeline to completion” but it was “willing to continue to engage with BHP and its advisers on this topic”.
The Sydney-listed firm has been hiking its bids for Anglo American over the past month after making an initial unsolicited $31bn offer for the firm in April.
Last week, the miner lifted that to £34bn but retained its condition that Anglo American carve off its iron ore and platinum business, in an offer that was roundly rebuffed as “highly unattractive” by Anglo American.
London-listed Anglo American has been forced to accelerate its own break-up plans to quell its investors and last week announced a carve off of its De Beers diamond operation, platinum division Amplats, and its coal steel-making business.
While Anglo’s copper mines are seen as its prized asset, the calls to ditch its iron ore business by BHP have proved contentious due to its deep roots in the South African economy and a stake held by the government.
The South African government owns a seven per cent stake in the company through its Public Investment Corporation and has come out firmly against the proposed takeover since it was revealed last month.
“Nobody here views this deal favourably,” said James Lorimer, the shadow minister for mining and natural resources. “Anglo American’s business here was once the jewel in the crown of South Africa’s economy. Under this deal it could be sold off for parts from someone else’s company.”
After Anglo American revealed its break-up plan last week, South Africa’s Public Investment Corporation (PIC) said it was considering whether to back the move and stressed the “mining sector remains a critical part of the South African economy”.
The break-up plans have also been backed by top investor Legal & General Investment Management, which owns a 1.8 per cent stake in the firm.