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Mining Giant Anglo American Declines BHP Group's Third Buyout Offer As The Time For Discussions Is Extended

Mining Giant Anglo American Declines BHP Group's Third Buyout Offer As The Time For Discussions Is Extended
On Wednesday, Anglo American turned down a third acquisition offer from competitor BHP Group while also agreeing to a one-week extension of the discussions deadline.
“The Board considered BHP’s Latest Proposal carefully, concluded it does not meet expectations of value delivered to Anglo American’s shareholders, and has unanimously rejected it,” Anglo American Chairman Stuart Chambers said in a statement on the London Stock Exchange website.
“However, the Board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one week extension to the PUSU deadline which has been consented to by the Panel,” Chambers added.
The British miner verified that, based on unaltered share values as of market closing on April 23, BHP's third bid offered around £29.34 per Anglo American share.
Under U.K. takeover regulations, BHP had until 5:00 p.m. London to submit a formal and final offer for Anglo after a protracted four-week bidding war, prior to negotiations being prolonged.
Shortly after the news, Anglo American's shares increased by 0.35%, while BHP's shares decreased by more than 3.4%.
Given the critical role that copper plays in the energy revolution and in goods like electric vehicles, power grids, and wind turbines, the mining and metals giant located in Australia has made two previous non-binding proposals for Anglo in an attempt to strengthen its position as the industry leader in this sector.
According to a Reuters estimate, the merged businesses would create a massive participant in the copper mining industry that would contribute 10% of the world's output.
But Anglo said that the two prior bids "significantly undervalue the company and its future prospects" and rejected them.
In previous proposals from BHP, Anglo was required to demerge from Anglo American Platinum Limited and Kumba Iron Ore Limited, two companies that collectively produce a significant amount of the company's copper. At the time, Chambers stated that the plan put the company's executives at danger and brought about "substantial uncertainty."
Later, as part of a massive reorganisation of its 107-year-old company, Anglo revealed intentions to spin off its highly valued De Beers diamond branch as well as its steelmaking coal, nickel, and platinum operations.
The reorganisation, according to Anglo CEO Duncan Wanblad, is a component of ongoing initiatives to "streamline the business and provide greater value to shareholders."
The mining business has been quiet for more than ten years, but the takeover effort opens the door for mega-deals to resume. The recent surge in copper prices has also increased demand in the market, since competitor BHP Rio Tinto is also growing its metals sector.

Christopher J. Mitchell

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