BHP Group has walked away from a fresh takeover approach for South African-founded Anglo American Plc.
BHP walking away ends an unexpected and short-lived attempt by the world’s largest miner to thwart a planned tie-up between its smaller rival and Canada’s Teck Resources.
BHP confirmed on Monday that it had held preliminary discussions with Anglo, but said it was now “no longer considering a combination of the two companies,” and would focus on its own existing portfolio.
The regulatory statement followed a Bloomberg News report on Sunday that BHP — which had already failed in a bid for Anglo last year — made a new overture in recent days.
Anglo rejected that new approach, according to people familiar with the situation, after reviewing the proposal and deciding that it was not superior to the combination with Teck.
While Anglo American is now a British multinational with headquarters in London, its origins trace back to 1917 in South Africa.
The company originally started mining gold, but later expanded into diamonds, coal and other minerals.
Its only South African operations now lie with Kumba Iron Ore, following the unbundling of Anglo American Platinum, now Valterra Platinum, earlier this year.
The deal
BHP’s renewed interest reflects in Anglo pressures in an industry eager to add scale and growth, particularly in copper, where supply has been dwindling and demand is expected to rise as the world electrifies.
The mining giant’s overture comes just weeks before shareholders from Anglo and Teck — two long-standing, copper-rich targets — are scheduled to vote on their own deal to create a company worth more than $60 billion.
BHP shares rose as much as 1.3% in Sydney on Monday before paring most gains, as investors digested news of the attempt and its abandonment. The stock was up 0.1% just before the close.
The revelation that BHP had another crack at Anglo surprised some shareholders, particularly because CEO Mike Henry had spent the months since the last takeover attempt reaffirming the company’s focus on its existing assets, said Dylan Kelly, head of research at Terra Capital, which holds BHP stock.
“There are lots of questions surrounding what this means for their new strategy,” he said.
Copper miners with quality, long-life assets, are scarce and while several have operational issues, they are still deemed by investors to hold value for growth in the future. This has made them expensive.
The second attempt by BHP in as many years to buy Anglo underscores just how hard it is to do M&A for copper in the current environment, said Jamie Hannah, the Sydney-based deputy head of investments and capital markets at Van Eck Associates Corp., which holds shares in BHP.
“I don’t think this approach was a failure,” he said. “Mike Henry is just trying to do difficult deals in a difficult market. It was always going to be hard.”
BHP’s earlier, 2024 proposal had required Anglo to partly break itself up. The latest plan was structured in a simpler way, the people said, and Anglo has since exited its South African platinum business — potentially making it more digestible to BHP.
Still, since BHP’s last dalliance with Anglo ended, its shares have fallen in Australian trading, while the smaller company’s shares have risen 11% in London. The deal with Teck has also received broad-based support from Anglo investors.
“Maybe BHP thought there was still an opportunity to squeeze in,” said Glyn Lawcock, head of metals and mining at Barrenjoey Markets Pty Ltd.
He added that BHP now had to focus on its big-ticket copper investments, including at its giant Escondida mine in Chile, at the Vicuna venture in Argentina and at operations in South Australia.
BHP said in its statement on Monday that it continued to believe that a combination with Anglo “would have had strong strategic merits and created significant value for all shareholders.”
But, the company added, it was “confident in the highly compelling potential of its own organic growth strategy.” It did not provide details of any specifics put to the target’s board.
Lazard Inc., UBS Group AG and Barclays Plc acted as advisers to BHP on their latest approach.
Anglo declined to comment. Teck and Anglo shareholders are set to vote on 9 December, and the deal still needs the approval of regulators in countries including China, the US and Canada.
By Bloomberg, additional reporting by BusinessTech
