Anglo rejects BHP’s revised £34bn proposal
Diversified major Anglo American has rejected a revised proposal put forward by BHP, which valued the UK-headquartered miner at about £34-billion.
Under the revised proposal, unveiled by BHP on Monday, Anglo shareholders would receive 0.8132 BHP shares for each ordinary share they own, as well as ordinary shares in Anglo American Platinum (Amplats) and Kumba Iron Ore, which would be demerged.
The terms of the revised proposal represent a total value, based on undisturbed share prices, of about £27.53 per Anglo American ordinary share, including £4.86 in Amplats shares and £3.40 in Kumba shares, valuing Anglo’s share capital at about £34-billion.
“BHP put forward a revised proposal to the Anglo American board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected,” said CEO Mike Henry.
The revised proposal represents a 15% increase in the merger exchange ratio and increases Anglo American shareholders’ aggregate ownership in the combined group to 16.6% from 14.8% in BHP’s first proposal.
The revised proposal compares with BHP’s initial £25-a-share proposal, which was deemed inadequate by Anglo and its shareholders. Market sentiment as gauged from analysts and traders surveyed by Bloomberg last month, converged around an average price of £30.43 a share for a potential deal, with responses ranging between £28 and £35.
BHP said that the transaction structure had been designed to ensure the demergers were sequenced to complete immediately before the scheme of arrangement became effective, which would result in Anglo shareholders receiving shares in Amplats and Kumba when they receive the BHP share consideration.
BHP would also assume the liabilities of Anglo on completion, which would include the costs associated with completing the demergers and any other transaction-related costs.
Henry emphasised the strategic alignment between BHP and Anglo, stating that the companies were a strategic fit and that the combination was a “unique and compelling opportunity to unlock significant synergies”.
“The combined business would have a leading portfolio of high-quality assets in copper, potash, iron-ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets,” he said.
“The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American’s portfolios.
“In putting forward a revised proposal, we have been guided by our capital allocation framework and our view of the fundamental value of Anglo American and BHP,” added Henry.
SOURCE:miningweekly.com
