BHP fails to secure second takeover offer to Anglo American

Mining colossus BHP Group Ltd (ASX:BHP) has today confirmed that it made a second unsuccessful takeover offer to Anglo American Plc last week – one which evaluated the latter’s share capital at 34 billion British pounds (approximately $60 billion) and offered Anglo American shareholders a greater percentage of investment in the proposed ‘combined group’.

BHP had previously proposed a takeover of Anglo American on April 16, but this too was rejected.

The second offer – to be completed through a scheme of arrangement – would have offered Anglo American shareholders 0.8132 BHP shares for each ordinary share they owned in Anglo American – meaning they as a group would take on an ownership of around 16.6% of the combined group created as a result of the takeover.

This was up from an ownership offer of 14.8%- made in the first proposal – which shareholders would have held in the ‘combined group’.

In the revised offer, Anglo American would also distribute ordinary shares in Anglo American Platinum Ltd and Kumba Iron Ore Ltd – companies in which it has a controlling stake – to shareholders according to their effective interest in these.

This indicated that BHP did not itself wish to take ownership of these two companies.

BHP Chief Executive Officer Mike Henry said the revised proposal would have delivered wins to his company and Anglo American.

“We are disappointed that this second proposal has been rejected,” he said.

“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.

“BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.

“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.”

BHP Group has been trading at $43.25