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Lure of Anglo’s copper mines could test BHP’s spending resolve
BHP (ASX: BHP) the world’s biggest miner, would need to offer a minimum 40% premium over Anglo American’s (LON: AAL) share price to make a renewed takeover bid now the rival’s value has been boosted by asset sales, two sources close to the matter told Reuters.
As diversified miners shift their focus to metals needed for the transition to cleaner energy, copper, with multiple uses from power to construction, has attracted intense interest.
BHP wants Anglo’s prized copper assets in Chile and Peru.
Its $49 billion, or 31.11 pounds sterling ($39.38) a share, attempt failed in May, but BHP did not rule out a renewed offer.
Investors and banking sources say at least a 15-to-20 pound per share premium to its current value of around 23 pounds per share, including a cash component, is needed to make any offer compelling.
Anglo has strengthened its balance sheet after receiving almost $6 billion in cash from selling coal assets and shares in its South African platinum unit as part of a restructuring plan CEO Duncan Wanblad announced in May.
Its shares have rallied by just over a fifth during the last 12 months, LSEG data show, while BHP’s stock has lost almost the same percentage over the same period.
The market is anticipating any renewed offer from BHP could face competition, the sources said, as a restructured Anglo focused on copper could attract rival bids.
The sources, who requested anonymity because they were not authorized to speak publicly, said the need to come up with an offer that could succeed was a challenge given CEO Mike Henry’s stated aim of maintaining spending discipline.
Investors also said it would be difficult.
“There probably is a window for a deal still, but I don’t think there is much of one,” Ian Woodley, a fund manager at Old Mutual, which holds shares in both Anglo and BHP, told Reuters.
“They (BHP) really have to come in with a strong bid and that’s not what they want to do.”
BHP chairman Ken MacKenzie told the company’s annual general meeting on Oct. 30, it had “moved on” from pursuing Anglo.
The company, however, immediately contradicted its top director. It said the UK Takeover Panel had confirmed MacKenzie’s comments “will not be treated as a statement of intention not to make an offer in respect of Anglo”.
BHP declined to comment for the purposes of this story. Instead it referred to comments Henry made at a conference in Paris on Tuesday.
“We did try the Anglo American acquisition. They had other ideas and they’ve kind of gone off on their own, but I step back and say plan A for BHP is always to make more of the resources we have both through productivity but also developments,” he said.
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