GLENCORE was said to be preparing to enter an offer for Anglo American – a development that, if true, could set off a bidding war with BHP.
Reuters reported that Glencore had held preliminary discussions, citing people familiar with the situation. BHP’s all-share takeover proposal for Anglo has been in the public realm for about nine days but no competitors for Anglo have emerged so far.
BHP offered 0.7097 BHP shares for each Anglo share held as well as their respective holdings of ordinary shares in Anglo American Platinum and Kumba Iron Ore which would be distributed by Anglo to its shareholders.
Glencore is currently weighing other corporate matters such as whether to retain its coal assets rather than demerge them as it initially planned.
It bought the coal mines of Teck with a view to a spinoff in New York in about two years. But shareholders think it makes more sense to retain the assets especially as there are concerns about whether the base metals business would attract a premium.
Another potential bidder for Anglo, Rio Tinto, has so far remained silent on the matter. It might also have an interest in Anglo’s copper assets but it is thought to have cheaper rated paper than BHP so its shareholders would have to pay more to offer a premium.
Barrick Gold is not interested in making a bid despite its CEO’s interest in building a copper portfolio. “We are not interested in bidding for Anglo American, as we are building (copper assets) of our own,” said Mark Bristow in an interview with Reuters.
Meanwhile, BHP executives, including its top dog Mike Henry, are in South Africa ahead of meetings with Government officials, according to a report by Bloomberg News.
The response from the South African government to BHP’ offer has been frosty. Gwede Mantashe said his government’s interactions with BHP over the years had been “negative”. He added that BHP had “never did much for South Africa.
“What we saw is that it dumped coal and then created a small company called South32, which is now marginall,” he told the Financial Times.
BHP issued a statement on Thursday emphasizing that its proposal was not an indictment of the country. “The proposed structure does not reflect a view of South Africa as an investment destination and is based on portfolio and commodity considerations,” the company said.
BHP will meet with President Cyril Ramaphosa’s administration among other key stakeholders, said Bloomberg News. The company will lay out the exact detail of the takeover proposal including the benefits of unbundling Amplats and Kumba which will see 100% of cash flow generated remaining in South Africa.
South Africa’s state pension fund the Public Investment Corporation controls 8.4% of Anglo’s shares – only BlackRock Inc. owns more, said Bloomberg News.
