BHP will maintain the listing of Kumba Iron Ore, Anglo Platinum and its own on the Johannesburg Stock Exchange despite proposing to unbundle the two South Africa-focused assets under its proposed offer to acquire Anglo American, it said yesterday.
There has been widespread criticism of the Australian commodities giant after its proposal to acquire Anglo American last month, with unionists and South African government officials opposing the bid.
The board of Anglo American has rejected the $39 billion (R741bn) offer by BHP, saying it significantly under values the Johannesburg and London-listed manganese, copper, platinum and iron ore group.
The board of Anglo American also said it was against BHP’s proposed restructuring of the company.
“The structure of BHP's proposal, including the proposed distribution of Anglo American's shares in Anglo Platinum and Kumba to its shareholders, reflects the priorities for BHP's portfolio and opportunity for synergies,” BHP said in a statement.
It added that under its proposed structure, Anglo Platinum and Kumba shares would continue to be listed on the JSE, and the companies would continue to be run by established South African-based management teams.
“The BHP Group has been listed in Johannesburg for multiple decades and intends to maintain its listing on the JSE,” BHP said.
“The proposed structure does not reflect a view of South Africa as an investment destination and is based on portfolio and commodity considerations.”
Anglo American chairperson Stuart Chambers told shareholders at the company’s annual general meeting this week that BHP’s proposal was “opportunistic” and had failed to “value the company’s prospects” for the future.
Analysts also said BHP was seeking to benefit from Anglo American’s current low valuation, and it was also expected that rival offers may emerge from the likes of Rio Tinto, Glencore and others.
BHP, however, insisted that South Africa would continue to benefit from Anglo American Platinum and Kumba, operating as independently listed South African companies investing in local operations, communities and jobs under its proposed restructuring.
“BHP attaches great importance to creating social value for society and communities,” the company said.
“BHP believes this structure unlocks immediate value, delivering shareholders and stakeholders access to future growth opportunities and investment currently not available under the existing ownership structure.”
Chambers rebuffed this, saying at Anglo American’s AGM that BHP’s proposed structure was “highly unattractive” and created “substantial uncertainty and execution risk” which was expected to be borne almost entirely by Anglo American and its shareholders.
This at a time when Anglo American CEO Duncan Wanbald had “defined clear strategic priorities – of operational excellence, portfolio, and growth – to deliver full value potential” for the company, added Chambers.
Shares in BHP declined 1.33% to R519.80 in afternoon trade on the JSE yesterday.
The Anglo American share price traded 0.76% weaker at R612.28 on the same bourse.
Old Mutual Wealth’s Private Clients division research analyst Sameer Singh said BHP was likely to raise its offer beyond the $39bn that had already been rejected by Anglo American’s board.
“Anglo offers a large, high margin and high growth potential copper asset base with close geographic proximity to BHP’s Chilean and Peruvian copper assets,” Singh said.
“The deal would see the combined entity being one of, if not the, largest copper producer in the world, with 2.6 million metric tons of production a year, accounting for almost 10% of global production.”
BUSINESS REPORT