SHARES in Anglo American fell more than six percent on Monday morning in Johannesburg following a report BHP had backed off from making a bid for the company.
Citing people familiar with the situation, the Financial Times said BHP’s interest had “cooled” since launching last year’s £39bn hostile takeover.
Analysts said the rationale for an offer had diminished. “On the face of it, if BHP were bidding what they thought was fair value, it is difficult to see why they would bid more now,” George Cheveley, fund manager at Ninety One, told the newspaper.
It was possible BHP would wait until Anglo had completed its own restructuring plans which the group’s CEO Duncan Wanblad unveiled in May. Wanblad said at the time he’d always planned to restructure Anglo but that BHP’s attentions accelerated the process.
In terms of the restructuring, Anglo is to demerge its stake in Anglo American Platinum and sell its 85% stake in De Beers. It has already agreed to sell its metallurgical coal mines in Australia which was a third aspect of its restructuring. A fourth was to slow the development of the UK-based crop fertiliser project, Woodsmith.
“It will be a different company after those restructuring changes,” said Ben Davis, an analyst at RBC. “I feel there is already a bid premium in the shares today.”
“There is no transaction that is a ‘must do’ transaction for BHP,” CEO Mike Henry told the Financial Times in December. Henry said the company only pursued deals when it was “for the right commodity, the right long-life assets”, and when extra value can be unlocked by BHP’s ownership.
“That’s a pretty strict set of tests. There are not that many opportunities that meet all of those criteria,” he said.
