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BHP Group (ASX:BHP) had been interested in potentially muscling in on Canadian miner Teck Resources’ planned Anglo American takeover, but has since ruled out the $64 billion swoop after speaking to the company’s directors.
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There had been early talks between both parties, a report from the Financial Review suggested this morning, but that’s as far as it will now go.
BHP’s PR arm then confirmed the stance early on Monday morning: “Following preliminary discussions with the board of Anglo American, BHP confirms it is no longer considering a combination of the two companies.”
The biggest hurdle BHP was going to face, apparently, was that Teck could match any unsolicited bid that emerged during the ongoing negotiation phase.
That, combined with the fact that Anglo would have to pay a US$330 million break fee should it walk away from the deal in these latter stages (which would have come out of BHP’s pocketbook after it took control in the merger), meant that BHP was always going to have a hard time getting its proposal to stick.
BHP also faced a race against the clock, with Anglo shareholders all teed up to vote on the Teck approach in an extraordinary meet on December 9.
That vote is expected to pass, which will then see Anglo and Teck come together in a $50 billion marriage that will see it command a 70% exposure in copper. Anglo holders will walk away with 62.4% of the entity’s shares.
Meanwhile, BHP will double down on its own growth strategies after being shunted on takeover moves. A major battlefield already emerging for the Australian heavyweight is in the Chinese market, where the state-backed mineral group in the Middle Kingdom has been told not to buy from the mega-miner.
BHP shares will open Monday trade morning at $40.37 each.
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