Home Commodities Anglo American to be bought or broken up after rejecting BHP's £31bn bid, investors believe

Anglo American to be bought or broken up after rejecting BHP's £31bn bid, investors believe

by SuperiorInvest

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Investors believe mining company Anglo American will be bought out or broken up even after the 107-year-old London-listed group rejected a £31bn hostile takeover bid from Australian rival BHP.

Anglo said on Friday that BHP's indicative share offer “significantly undervalues” the company and would be “very unattractive” to its shareholders.

But investors, including activist hedge fund Elliott Management, are circling and Anglo chief executive Duncan Wanblad now faces a fight to keep the FTSE 100 company intact.

“I can't see Anglo existing as an independent company by the end of the year in its current form,” said one of Anglo's top 10 shareholders.

The company's position has been further complicated when US-based Elliott built up a $1 billion stake using derivatives, roughly equivalent to 2.5 percent of the company's shares, according to regulatory filings.

Analysts and investors have predicted that Anglo's rejection of the offer will encourage competitors such as Glencore and Rio Tinto to submit rival bids and BHP to improve its price. BHP has until May 22 to make a formal approach under UK procurement rules.

Anglo's decision represents the latest attempt by Melbourne-based BHP (colloquially known as “The Great Australian” in its home market) to reshape the global mining industry.

Under Mike Henry, the company veteran who was appointed chief executive four years ago, BHP has refocused its business on what it calls “forward-looking” minerals, including copper and potash, while divesting its assets. oil and gas exploration.

The current all-stock approach excludes Anglo's platinum and iron ore businesses in South Africa, which are independently listed in Johannesburg. BHP said that if successful it would review Anglo's other assets, such as De Beers' diamonds and manganese operations in South Africa.

South Africa's ruling African National Congress, which is preparing for general elections in May, reacted angrily to a proposed spin-off of one of its most historic companies.

“Yeah [companies] If they don't want South African assets, then they don't want Anglo,” Gwede Mantashe, the country's mining minister, told the Financial Times on Friday. “Anglo is a South African industry. Anglo is not a foreign entity. He was born and raised here, from our cheap labor. . . so you cannot love Anglo and not love South Africa.”

Some large Anglo shareholders said this week they expected BHP to make a higher offer. As a result, BHP shares closed down 4.6 percent on Friday amid investor concerns about the company overpaying. The drop reduces the valuation of the deal from £31bn to less than £30bn.

BHP declined to comment on Anglo's rejection of its proposal.

Anglo's share price rose another 3.5 per cent on Friday following news of the Elliott stake. This week they have risen by more than a fifth.

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