Revised highly conditional combination proposal from BHP
The Board of Anglo American (the “Board”) notes the announcement made by BHP Group Limited (“BHP”) and confirms that on 7 May 2024 it received a second unsolicited, non-binding and highly conditional combination proposal from BHP (the “Latest Proposal”).
The structure of the Latest Proposal is unchanged from the proposal previously rejected on 26 April 2024. This comprises an all-share offer for Anglo American by BHP, with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American shareholders. The all-share offer and required demergers would be inter-conditional.
Under the terms of the Latest Proposal, for each Anglo American share owned, Anglo American shareholders would receive:
- 0.8132 BHP shares; and
- Ordinary shares in each of Anglo American Platinum Limited and of Kumba Iron Ore Limited (distributed by Anglo American to its shareholders in direct proportion to Anglo American shareholders’ effective interest in Anglo American Platinum Limited and Kumba Iron Ore Limited).
The Board has considered the Latest Proposal with its advisers and concluded that it continues to significantly undervalue Anglo American and its future prospects.
In addition, the Board has also taken into account the detailed feedback from its extensive engagement with Anglo American’s shareholders and stakeholders since the approach from BHP became public on 24 April 2024.
Aside from significantly undervaluing Anglo American, the Latest Proposal continues to contemplate a structure which the Board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent, and significant execution risks.
The requirement to pursue two contemporaneous demergers creates significant uncertainty, which falls disproportionately to Anglo American shareholders.
The Anglo American Platinum Limited and Kumba Iron Ore Limited shareholdings, at current market value, are worth approximately $15bn and 34% of the proposed total consideration. This is a substantial amount of stock to distribute and reflects a majority of the shares of both Anglo American Platinum Limited and Kumba Iron Ore Limited. This creates significant uncertainty as to the delivered value as part of the proposal.
In addition, by requiring this as part of a takeover of Anglo American, it would result in additional approvals related to these two demergers. The timetable to obtain these additional approvals is expected to be lengthy. Some of these approvals may result in potential conditions being attached to the approvals, which could disproportionately impact Anglo American Platinum Limited and Kumba Iron Ore Limited and are not addressed in the Latest Proposal.
Accordingly, the Board of Anglo American has unanimously rejected the Latest Proposal.
The Board is confident in Anglo American’s standalone future prospects. Anglo American has accelerated plans for delivery of its standalone strategy and will provide a detailed investor update on 14 May 2024.
Stuart Chambers, Chairman of Anglo American, commented:
“The latest proposal from BHP again fails to recognise the value inherent in Anglo American. Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive. The Anglo American team is focused on delivering against its strategic priorities of operational excellence, portfolio simplification and growth and is set to accelerate delivery in order to unlock this inherent value.
The BHP proposal also continues to have a highly unattractive structure. This leaves Anglo American, its shareholders and stakeholders disproportionately at risk from the substantial uncertainty and execution risk created by the proposed inter-conditional execution of two demergers and a takeover.”
Anglo American shareholders are advised to take no action in relation to this matter. A further announcement will be made as and when appropriate. There can be no certainty that any firm offer will be made.
Under Rule 2.6(a) of the Takeover Code, BHP must by not later than 5.00 p.m. on 22 May 2024, either announce a firm intention to make an offer for Anglo American in accordance with Rule 2.7 of the Takeover Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Takeover Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Takeover Code. This announcement is being made without the agreement or approval of BHP.
