With the dust on the BHP Group’s failed attempt at acquiring Anglo American still settling, the focus remains on copper which is central to the world's transition to a greener economy. Anchor Capital, investment analyst, Seleho Tsatsi, explained the varied challenges that plagued the deal on the OFM Business Hour and expanded on why the failure of the mega acquisition may open doors for other suitors in the mining world like Glencore.

Copper at the heart of the attempted acquisition  

Tsatsi said the driving motivation for BHP's pursuit of Anglo American was the latter’s copper assets. As a result, copper recorded multi-year highs in 2024, which didn’t help BHP’s bid. The $49 billion bid serves as a reminder of the significance of commodities as the world shifts towards a greener economy.  

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Structure of proposal 

The structure of BHP’s proposal for Anglo American was that they wanted to offer their shareholders BHP shares rather than, for example, cash. They proposed for every existing Anglo American share, a shareholder would get 0.886 BHP shares. Also conditional in the proposal was that Anglo American's stakes in Kumba Iron Ore and Amplats were to be spun off or divested. In this latest proposal, they increased the amount of BHP shares they were offering Anglo shareholders by 9%.

 “If you remember back to the first proposal, they were offering just over 0.7 BHP shares per one Anglo share. So, if you compare the third proposal, which has been rejected, to the first one, they’ve increased the equity that they’re offering Anglo shareholders by 25%.”

Reasons behind the rejection 

Anglo has previously highlighted the structure of the deal, particularly the spinoffs of Anglo American Platinum and Kumba Iron Ore, has a few risks they feel need to be addressed. Tsatsi expanded on this further:

 “Anglo American owns about 79% of Amplats, or Anglo American Platinum, and about 70% of Kumba. These are very sizable stakes in relatively large South African mining companies. The proposed spinoffs that BHP has put on the table for these two stakes leave Anglo with some concerns, essentially boiling down to the size of stakes that Anglo will be trying to spin off to its shareholders and the potential implications for those companies and their share prices. 

‘BHP has increased its offer by 25%’

“Anglo is of the view that the value of the offers or proposals has been too low. BHP has started to make strides to come closer to what Anglo deems to be a fair valuation of its business. As we said earlier, BHP has increased its offer by 25% when you compare the third proposal to the first. So, you get the sense that they're getting closer to an agreement, especially considering that Anglo consented to delay the deadline under the UK Takeover Code”.

On Wednesday, 29 May, Anglo American rejected BHP’s request to extend the deadline further which led to the latter party dropping out of the much-publicised bid altogether – for now that is. 

OFM Business Hour