Miner Anglo American rejects BHP's new measures, deadline extension for takeover offer

Australia's metals and mining company BHP has proposed a series of socioeconomic measures intended to address Anglo American's concerns regarding the former's takeover offer for the latter, it said May 29, hoping for an extension to a deadline.

The measures come as BHP hopes to break an impasse after Anglo rejected a third takeover offer from BHP on May 22. However, on the same date, Anglo also agreed on an extension, which will expire on May 29 at 5:00 pm London time (1600 GMT), for BHP to make another offer.

A sticking point in the structure of the deal is for Anglo to divest its entire shareholdings in two South African miners, namely Anglo Platinum and Kumba Iron Ore.

"BHP is confident that the measures it has proposed to the board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals," it said.

BHP added that it was "willing to discuss an appropriate reverse break fee, payable by BHP, on failure to achieve the necessary anti-trust and regulatory approvals, including in South Africa."

Other proposed measures included BHP sharing the costs of increased South African employee ownership of the listed businesses in the African nation and maintaining current employment levels at Anglo American's Johannesburg office to provide ongoing support to the South African assets to be acquired.

BHP expects the proposed measures to be maintained for at least three years and "believes a further extension of the deadline is required to allow for further engagement on its proposal."

This announcement does not amount to a firm intention to make an offer, said BHP, adding that there can be no certainty that an offer will be made and was made "without prior agreement or approval of Anglo American."

Anglo's response

Anglo responded to BHP's announcement later on May 29, rejecting the request to extend the deadline.

It also said the limited socioeconomic measures put forward by BHP on May 28 did not sufficiently address the fact that Anglo's shareholders would "bear disproportionate execution and value risks and uncertainty over an extended period, nor does it consider that material conditions would likely be imposed in relation to both Anglo American Platinum and Kumba which would require the approvals of their respective boards."

It added that the value risk would only be on Anglo's shareholders and the deal would erode the value of the shares held by the minority shareholders of both subsidiaries.

Anglo added that the BHP offer was "in clear contrast" to its own simpler standalone plan announced May 14 to accelerate value delivery, reiterating that the complex structure of the offer would likely take more than 18 months to implement.

"Throughout the engagements with BHP, BHP continues to restate its belief that the risks of its complex structure are not material, yet has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks," Anglo said.

It summarized that BHP had overall not addressed its fundamental concerns relating to the disproportionate execution risk to Anglo shareholders, leading to the board unanimously concluding that there was no basis for a further extension to the deadline.