Anglo American has rejected a 31.1 billion pound ($39 billion) takeover offer from BHP, saying the proposal significantly undervalues the mining company and its future prospects.
BHP, the world’s largest listed mining group, had until May 22 to make a binding bid for Anglo American. However, the Anglo American board has now dismissed BHP’s initial offer of 25.08 pounds per share, stating that it “fails to value Anglo American’s prospects.”
Anglo American Chairman Stuart Chambers said the BHP proposal was “opportunistic” and would dilute the value upside for Anglo’s shareholders compared to the company’s standalone strategy.
The rejection of the bid comes as Anglo American’s shares hit a one-year high, trading around 3.5% higher at 26.50 pounds per share. This suggests that investors expect BHP to sweeten its offer in order to secure a deal that would create the world’s biggest producer of copper, a key metal for the clean energy transition.
Adding to the stock’s momentum, reports indicate that activist investor Elliott has built a $1 billion stake in Anglo American, further bolstering confidence in the company’s standalone value.
BHP’s bid has been focused on gaining exposure to copper, as a tie-up with Anglo would give the combined group around 10% of global copper output. However, the complexity of the deal, which would involve different regional jurisdictions, and the fact that some of Anglo’s businesses are lower-margin than BHP’s, have raised concerns among investors about the merits of the transaction.
Analysts and fund managers suggest that BHP will likely need to offer a significantly higher price to convince Anglo American’s management and shareholders to accept the deal. The Australian mining giant is expected to provide more details on its proposal to investors next week.