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Anglo American shareholders ready to accept simpler deal from BHP

anglo american
anglo american

Anglo American’s shareholders are ready to accept a simpler deal from BHP, paving the way for a potential takeover of the FTSE 100 mining giant.

Two significant Anglo shareholders said BHP’s current plan to spin-off parts of Anglo as part of a £34bn all-stock takeover was too complicated.

However, they indicated that they would be willing to consider a revised bid that didn’t involve a break-up.

One top 15 Anglo shareholder said: “Taking away that conditionality [of spinning-out parts of the business] can improve things.”

It is a blow to Anglo chief Duncan Wanblad, who has been seeking to convince investors to support his rival plans to improve performance at the miner and unlock value.

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BHP chief executive Mike Henry spent part of this week at a major mining conference in Miami, where he is understood to have taken soundings from Anglo shareholders about what price they would be willing to accept.

Part of the investor feedback is also understood to include criticism about the complexity of the deal.

Anglo chief Duncan Wanblad has been trying to convince investors to support his rival plans to improve performance at the miner
Anglo chief Duncan Wanblad has been trying to convince investors to support his rival plans to improve performance at the miner - Dwayne Senior/Bloomberg

Another top 15 Anglo investor said: “We don’t need to accept any offer. There’s no gun to our head.”

Anglo’s management has rebuffed two bids from BHP over the past few weeks.

However, the Australian mining giant is widely expected to return with a third offer next week ahead of a Takeover Panel deadline on Wednesday evening.

BHP’s most recent offer was worth £34bn, or £27.53 per share. The proposed deal involved a two-step process where Anglo’s iron ore miner, Kumba, and platinum digger, Amplats, would first be divested to Anglo shareholders before BHP takes over the rest of the business.

Anglo owns 79pc of Amplats and 70pc of Kumba, which are both listed in Johannesburg.

The complexity of the multistage process, and uncertainty around how the stakes in Amplats and Kumba would be valued post-spinout, have made investors wary.

A City fund manager who holds Anglo stock said: “BHP needs to understand how complex this deal looks to investors. They are going to end up with all sorts of bits and pieces. I would prefer BHP to do the heavy lifting and take away all of Anglo.”

Another British money manager said: “It’s difficult to arrive at what the value would be because of these pre-conditions attached. Ditching those would make things a lot easier.”

However, a third significant shareholder said the complexity was “not a priority” and they were more focused on the price BHP was offering.

Many investors want a bid above the £30 mark, which would value Anglo at more than £37bn.

BHP is yet to do due diligence on the group, which may make the company wary of over-bidding.

Mr Wanblad and his management team have so far refused to engage with BHP as they seek to protect Anglo’s independence.

Chairman Stuart Chambers this week used the complexity of BHP’s proposals to attack the deal, saying shareholders would be “at risk from the substantial uncertainty and execution risk”.

The takeover battle for one of the world’s biggest miners has prompted Anglo to propose its own radical break-up plan in an effort to unlock value for shareholders and safeguard its independence.

Hours after BHP made its latest offer, Anglo said it would sell its historic diamond brand De Beers, dial down investment in UK fertiliser mine Woodsmith and sell its coal mining business.

Anglo will also mirror BHP’s plan for Amplats by spinning off its 79pc shareholding to investors.

Mr Wanblad is understood to have also met with several leading Anglo shareholders in recent days urging them to back his plan.

BHP and Anglo declined to comment.