BHP is pulling out of a £39bn mega-merger with rival Anglo American

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  • author, Sean Farrington
  • stock, Business Presenter, BBC Today Programme

Mining giant BHP has pulled out of a takeover of rival Anglo-American in a deal worth £38.6bn.

BHP was particularly attracted to Anglo’s copper assets, with the metal’s value rising due to its role in the green energy transition.

The deal’s collapse followed a month-long tussle between the pair, culminating in a frenzied back-and-forth on Wednesday.

Anglo rejected BHP’s calls to extend talks on Wednesday morning, while BHP said it had been denied access to “key information” from Anglo during the talks “despite multiple requests”.

BHP’s chief executive, Mike Henry, said it was “unable to reach agreement with Anglo American on our specific views on South African regulatory risk and cost”.

Meanwhile, Anglo American chairman Stuart Chambers insisted the company could deliver more value to shareholders.

“Our shareholders will benefit from value transparency and diluted exposure to a simplified portfolio of world-class assets, continued strong operational performance and very attractive growth in copper, premium iron ore and crop nutrients.”

Back and forth

On Wednesday morning, Australia’s BHP sought to ease concerns about its plans for Anglo American’s business in South Africa – where Anglo has large operations – ahead of elections in the country.

However, Anglo American rejected the extension request, arguing that the contract terms were still insufficient.

The two have been discussing a deal since Anglo American rejected BHP’s first takeover approach of £31.1bn at the end of April.

Anglo later rejected BHP’s second offer of £34bn in early May and its third offer of £38.6bn last week, but some Anglo shareholders urged the company to continue negotiations.

Anglo and the South African government have also cited concerns about BHP’s proposal to freeze South African businesses.

After rejecting BHP for the third time, Anglo announced its own plans to break up its business by selling or spinning off key parts of the company, including its De Beers diamond operation and its platinum division, to focus on core areas such as copper. Premium iron ore and crop nutrition.

BHP had made a series of plans to allay Anglo’s concerns for at least three years.

The terms include maintaining current staff levels in Anglo’s Johannesburg office, having BHP listed on the Johannesburg Stock Exchange and sharing the cost of increased South African employee ownership “if required to obtain regulatory approvals”.

However, Anglo said BHP’s offer contained “the same complex and unattractive structure as the previously rejected proposals on 26 April 2024 and 13 May 2024”.

Speaking on the BBC’s Today program on Wednesday ahead of Anglo’s update, Ben Davies, head of mining at analyst Liberium Capital, said BHP’s plans “really don’t have much meat on the bones”.

He also lamented the prospect of another listed UK company being snapped up by foreign business.

“See [Anglo American] If it goes from the London Stock Exchange, it will definitely be a loss,” he said.

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