BHP Abandons Bid for Anglo American

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BHP Group has decided to withdraw its $49 billion bid to acquire rival Anglo American, marking the end of its six-week pursuit after Anglo rejected a last-minute request for more time. BHP’s primary objective was to acquire Anglo’s valuable copper assets in Latin America, aiming to bolster its position in the global shift towards clean energy and electric vehicles. However, the deal collapsed primarily due to the structure that required Anglo to divest its South African platinum and iron ore businesses.

Anglo granted BHP a one-week extension to submit a binding offer, but negotiations failed to resolve concerns over regulatory risks in South Africa. Despite BHP’s belief in the proposal’s potential, the two parties could not reach an agreement on managing regulatory challenges. BHP expressed confidence that its proposal offered the most effective structure to benefit Anglo’s shareholders.

In response, Anglo reiterated its commitment to its outlined plans to enhance shareholder value, focusing on divesting less profitable assets and expanding copper production. Following BHP’s announcement, Anglo’s shares dropped by 3% to £24.80.

Analysts view BHP’s disciplined approach positively in the short term, although they express surprise at the lack of a clear plan to address structural issues in the deal. BHP had proposed commitments to mitigate regulatory risks in South Africa, including job security for employees and shouldering the costs of increased employee ownership. However, Anglo deemed these commitments insufficient.

Concerns about the deal’s structure and potential economic ramifications in South Africa persist. BHP’s proposal had valued Anglo at £29.34 per share, but Anglo investors shared reservations about the proposal’s risks and pricing. Despite Anglo’s attractiveness due to its copper assets, BHP’s bid did not convince stakeholders, leading to its rejection.