BHP Group, the world’s biggest mining company, faced seeing its megamerger proposal with Anglo American fall apart, when the smaller company rejected BHP’s call to extend the takeover talks.
Anglo, whose shares trade on the London exchange, said on Wednesday that BHP’s latest proposal, valued at about 39-billion pounds , was overly complicated and failed to address some of its main concerns about joining forces with BHP. Anglo’s refusal to extend the takeover proposal talks for a second time came just hours before the “put-up-or-shut-up” deadline that would have required the company to convert its proposal to a firm offer or walk away.
Anglo feared inordinate execution risk, since the two spin-offs would require various regulatory approvals in South Africa. Analysts also said that demergers would greatly increase the liquidity of the shares of Amplats and Kumba, since Anglo would disappear as the majority owner, in effect inviting shareholders to bail out, causing the shares to sink.
As part of its effort to rebuff BHP, Anglo two weeks ago unveiled a radical restructuring plan that would see it selling or demerging De Beers, curb spending on its overbudget and delayed Woodsmith underground fertilizer project in Britain, and unload its coal and platinum businesses to create a “radically simpler business.”
In London trading on Wednesday afternoon, local time, Anglo shares were down 2 per cent, to just over 25 pounds. BHP closed flat in Sydney trading.