Anglo American Shares Fall as BHP Abandons $49 Billion Takeover
Mining giant BHP has walked away from its mega-bid after failing to agree on terms, forcing Anglo to proceed with a radical restructuring plan.
Anglo American plc saw its shares decline after BHP Group, the world’s largest miner, formally withdrew its nearly $49 billion takeover proposal, ending a five-week pursuit that would have reshaped the global mining landscape.
The decision, announced on Wednesday, May 29, 2024, followed a steadfast refusal from Anglo American’s board to accept a complex deal structure it argued was too risky for its shareholders. Following the news, Anglo American’s London-listed shares fell 3.9% to 2,458.00 pence in trading, as the prospect of a takeover premium evaporated.
The collapse of what would have been one of the largest deals in the sector's history centered on a fundamental disagreement over risk. BHP’s proposal required Anglo American to first demerge its majority stakes in South African platinum producer Amplats and iron ore miner Kumba Iron Ore. Anglo’s board repeatedly rejected this condition, stating in a press release that the structure carried “significant uncertainty and execution risk” disproportionately borne by its shareholders.
BHP CEO Mike Henry maintained that his company had been constructive but was ultimately unable to bridge the gap. “We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost,” Henry stated, noting that BHP could not verify key information to mitigate the perceived risks.
With BHP now bound by UK takeover rules preventing another bid for at least six months, the spotlight shifts to Anglo American’s management and its own dramatic plan to unlock value. In a strategic move to fend off the takeover and address investor concerns, CEO Duncan Wanblad had previously unveiled what he called the most “radical” shake-up of the 107-year-old company in decades.
Anglo American’s standalone strategy involves a significant slimming down of its sprawling portfolio to concentrate on its most profitable assets. The plan includes:
- A Focus on Copper and Iron Ore: Sharpening its focus on future-facing commodities like copper—a key component in the green energy transition—and its high-grade Brazilian iron ore operations.
- Divesting Diamonds: The company intends to sell or demerge its iconic but challenged De Beers diamond business.
- Exiting Platinum: Anglo plans to spin off its controlling stake in Anglo American Platinum (Amplats), a world leader in platinum group metals.
- Selling Coal Assets: The company will also divest its steelmaking coal assets in Australia.
This strategic overhaul is designed to create a simpler, more streamlined company that can deliver stronger returns for shareholders. The pressure is now squarely on Wanblad and his team to execute this complex series of divestments and prove that a leaner Anglo American can deliver more value than BHP’s offer.
Analysts note that while the standalone plan is ambitious, its success is not guaranteed. The execution of multiple large-scale divestitures carries its own set of risks and will test the market’s appetite for these assets. For investors, the immediate focus will be on the company’s ability to deliver on its promises and navigate the path forward without the safety net of a takeover offer.