BHP and Anglo cross swords on mandatory offer deadline extension

The company logo adorns the side of the BHP global headquarters in Melbourne, Australia. Photo: William WEST / AFP

The company logo adorns the side of the BHP global headquarters in Melbourne, Australia. Photo: William WEST / AFP

Published May 30, 2024


BHP and Anglo American were yesterday in disagreement on the Australian resource giant’s request for an extension of the deadline for it to make a firm offer for the Johannesburg and London-listed mining group.

Under London listing rules, BHP had until yesterday to make a firm offer for Anglo American.

Last week, Anglo American agreed to extend the deadline to pave the way for negotiations around BHP’s proposed $49 billion (R898bn) takeover, which entails the unbundling of Anglo American Platinum (Amplats) and Kumba Iron Ore.

According to Anglo American, these engagements over the past week failed to reach a common position.

“On 28 May 2024, BHP put forward a limited number of socio-economic measures that were confined in scope, impact and duration and that BHP stated would support regulatory approvals,” Anglo American said yesterday.

Earlier in the day, BHP said it needed a further extension to the deadline for it to make a firm offer for Anglo American or walk away.

“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal,” the company said in an emailed statement.

However, Anglo American rebuffed this, saying in its response that its board had resolved that “there is no basis for a further extension” to the deadline.

“BHP must by not later than 5pm (yesterday) either announce a firm intention to make an offer for Anglo American or announce that it does not intend to make an offer,” said Anglo American.

However, BHP insisted that the proposed measures it had put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from its acquisition of the Anglo American group.

BHP said the initial extension of the deadline provided it with the opportunity to engage with Anglo American about its concerns regarding its proposal.

“Since the extension to the deadline, BHP has continued to work extensively to address those matters. This has included several engagements with Anglo American and its advisers,” BHP said.

The Australian company has now proposed a range of socio-economic measures intended to address Anglo American’s concerns.

For example, it is willing to discuss an appropriate reverse break fee, payable by BHP, on failure to achieve the necessary anti-trust and regulatory approvals, including in South Africa.

BHP’s offer also comprises leeway to retain Amplats and Kumba Iron Ore’s listings on the JSE while also maintaining its listing on the JSE.

JP Morgan Chase analysts said that, if concluded, the BHP offer for Anglo American could result in outflows of as much as $4.3bn from South Africa.

BHP insisted yesterday that the transaction would achieve a JSE index weighting of approximately 5% on completion.

“BHP continues to believe that there would be clear benefits to the South African government, economy and communities from Anglo Platinum and Kumba Iron Ore becoming major standalone entities listed on the JSE with significant increased JSE index weightings,” BHP said.

With some South African stakeholders, including the government and labour unions expressing concern that the transaction would undermine Anglo American’s value and contribution across the economy, BHP said it was geared toward sharing “in the costs of increased South African employee ownership of the listed” businesses.

Nonetheless, Anglo American stuck to its guns, insisting that the new approach by BHP “does not sufficiently address the fact that Anglo American’s shareholders would bear disproportionate execution and value risks and uncertainty” over an extended period.

“The BHP proposal is in clear contrast to Anglo American’s simpler standalone plan to accelerate value delivery, as announced on 14 May 2024,” Anglo American said.