BHP Asserts: South African Assets Non-Negotiable in Anglo-American Takeover, Sources Reveal
According to investors familiar with BHP’s plans, BHP’s strategy for its proposed takeover bid for Anglo American hinges significantly on the divestment of Anglo’s South African assets. This strategic move is anticipated to be an integral component of any revised offer as part of BHP’s overarching strategy.
The “Big Australian” was rejected by Anglo-American on April 26, following its $39 billion takeover proposal. The plan’s complexity lay in the requirement that Anglo divest its shares in Kumba Iron Ore and Anglo American Platinum to its shareholders before any potential deal could proceed. Anglo American holds a majority stake in both Kumba and Anglo American Platinum.
While South Africa’s government closely scrutinizes the proposed deal, BHP views potential advantages in distributing shares of Kumba and Anglo-American Platinum. This distribution would enhance the free float in these companies, aligning with regulatory objectives. Moreover, it would stimulate index-linked buying and place the assets in the hands of natural holders within South Africa, further enhancing the proposal’s appeal.
BHP and its advisors have engaged with BHP investors to gather feedback on the deal’s future trajectory. Despite investor support for the takeover, cautionary notes against overpaying for control of Anglo exist. Analysts suggest that a sweetened bid, justified by long-term copper prices, may be warranted.
Encouragement from at least one shareholder suggests that BHP should consider retaining Anglo’s stakes in Amplats and Kumba rather than divesting them immediately post-acquisition. Such a move could potentially reduce the complexity and execution risk associated with the transaction.
As the deadline for a formal bid approaches on May 22, speculation looms about potential improvements to BHP’s offer. While the initial proposal was an all-stock bid representing a 31% premium to Anglo’s closing price on April 23, BHP is reportedly considering adjustments to enhance its attractiveness. The possibility of an improved offer underscores BHP’s determination to navigate the intricacies of the deal and secure shareholder and regulatory approval.
