BHP exits latest approach to buy Anglo, adding twist to merger saga

BHP (NYSE, LSE, ASX: BHP) has made another approach to buy Anglo American (LSE: AAL) despite the London-listed miner’s proposed merger with Canada’s Teck Resources (TSX: TECK.A/TECK.B).

On Sunday, BHP, the world’s largest mining company, said it was abandoning an offer it made last week in the run-up to Teck and Anglo shareholders voting Dec. 9 on the $53-billion proposed deal. 

“While BHP continues to believe that a combination with Anglo American would have had strong strategic merits and created significant value for all shareholders, BHP is confident in the highly compelling potential of its own organic growth strategy,” BHP general counsel Stefanie Wilkinson said in the release. 

Anglo, with a large portfolio of copper assets, has long been viewed by those within the industry as a takeover target. However, prospective buyers had largely been put off by the company’s mix of other relatively niche assets such as diamonds and platinum.

BHP had already attempted to buy Anglo last year but eventually walked away from a $49 billion deal over disagreements over its structure, as it required the smaller miner to break itself up first by spinning off majority stakes in the aforementioned niche assets in South Africa.

Simpler pitch 

This time, however, according to Bloomberg News on Sunday, BHP’s latest proposal was structured in a simpler and more straightforward way than last year.

Since the talks ended, Anglo’s stock performance has significantly outpaced that of BHP, which could make it more difficult to reach any agreement on a valuation. Anglo’s market capitalization in London, is now about $41.8 billion, while BHP’s is around $132.2 billion, according to LSEG data.

A renewed interest by BHP adds a new twist to a long-drawn-out saga involving Anglo, whose combination with Teck could potentially create an even bigger copper mining complex than the Escondida in Chile. If the BHP-Anglo deal had gone ahead last year, the combined entity would have been the world’s largest copper producer, with a total annual production of nearly 2 million tonnes.

Report of BHP’s fresh bid comes amid doubts surrounding the Anglo-Teck deal after reports that the Canadian government had placed pressure on certain conditions to be met, specifically stronger commitments to executive and management jobs at its proposed Vancouver headquarters.

The deal still needs the approval of regulators in the U.S., Canada and China.