The break-up of Anglo American could trigger a wave of further bids from global mining giants if its management sees the plans through to completion, a top shareholder has said.
The London-listed miner unveiled a major shake-up this morning that will see it carve off its diamond business De Beers and demerge its platinum, nickel and coal divisions.
Bosses at Anglo kicked off the review last year but have come under pressure from shareholders to publish the plans in recent weeks after rival BHP tabled two bids for the firm.
Under the terms of BHP’s second $43bn (£34bn) offer, Anglo was required to offload its Kumba iron ore operation in South Africa in a bid it rejected as “highly unattractive”.
However, top-ten Anglo American investor Ninety One, which holds a two per cent stake in the £36bn firm, said today the turnaround plans could simplify the business and make it a more tempting asset for a number of industry buyers.
“The plan today creates a longer term way of shrinking and right-sizing the Anglo portfolio, which means it might be interesting for a lot of different mining houses in 12 months time or 18 months time,” Dawid Heyl, a portfolio manager at Ninety One, told City A.M.
“There could be other bidders if it’s a smaller, more digestible entity.”
BHP’s first $31bn offer was quickly rebuffed by Anglo American. Its new offer still requires the firm to offload its iron and platinum division. Glencore and Rio Tinto were both said to be mulling counter bids before pulling back.
Anglo’s copper assets are seen as the main prize to investors due to their use in everything from electric vehicles to computers. Heyl said the second bid “didn’t feel like it was a substantial improvement”.
Shares in Anglo American slumped beyond one per cent after the publication of its plans this morning, suggesting shareholders favour a takeover.
However, BHP is widely expected to sweeten its second takeover offer for Anglo American for a second time and possibly add cash.
BHP has until May 22 to return with a binding offer or walk away under UK takeover rules.
“The language in the release suggests it’s not the best and final offer,” said Todd Warren, a portfolio manager at Tribeca Investment Partners, which holds Anglo shares.
Heyl added he would be “surprised if BHP gives up at this point”.
“I think they have been very serious in this approach. They were seeing investors and shareholders over the last few weeks,” he said.