{"id":9629,"date":"2024-05-14T06:27:04","date_gmt":"2024-05-14T06:27:04","guid":{"rendered":"https:\/\/economicherald.net\/?p=9629"},"modified":"2024-05-14T06:27:04","modified_gmt":"2024-05-14T06:27:04","slug":"monsters-of-rock-bhp-knocked-back-again-in-anglo-approach","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=9629","title":{"rendered":"Monsters of Rock: BHP knocked back again in Anglo approach"},"content":{"rendered":"<p><a href=\"https:\/\/stockhead.com.au\/company\/bhp-bhp\/\">BHP (ASX:BHP)<\/a> has been knocked back again in its bid to acquire Anglo American, facing a stiff block from the London-listed miner\u2019s board after tabling an improved \u00a327.94 per share bid.<\/p>\n<p>The revised proposal was never likely to be accepted, but seemed to be an attempt to smoke out Anglo\u2019s board and see what it would engage with.<\/p>\n<p>It came at a delicate time for Anglo, with an investor update today expected to outline the struggling conglomerate\u2019s plans to build value as a standalone business.<\/p>\n<p>And BHP\u2019s language has grown more adversarial, with the ASX-listed iron ore, copper and coal miner claiming its new bid sits at a 37% premium to the broker median NAV of Anglo\u2019s unlisted assets based on it its pre-bid share price.<\/p>\n<p>Claimed to come in at a value of \u00a334bn ($64.5b AUD), the deal bears a similar structure to a previous proposal, including the jettisoning of Anglo\u2019s unpopular platinum and South African iron ore stakes into Anglo shareholders\u2019 hands at a respective \u00a34.86 and \u00a33.40\/sh.<\/p>\n<p>But the control of BHP Anglo holders would claim has been bumped up from 14.8% to 16.6%.<\/p>\n<p>CEO Mike Henry has finally weighed in as well, taking a similar approach to the PR battle waged to secure BHP\u2019s $9.6bn takeover of OZ Minerals in 2022 and 2023.<\/p>\n<p>\u201cBHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected,\u201d he said.<\/p>\n<p>\u201cThe revised proposal represents a 15% increase in the merger exchange ratio and increases Anglo American shareholders\u2019 aggregate ownership in the combined group to 16.6% from 14.8% in BHP\u2019s first proposal.<\/p>\n<p>\u201cBHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.<\/p>\n<p>\u201cThe combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets.\u201d<\/p>\n<p>Not all analysts and shareholders are confident in those synergies. BHP\u2019s bid has already seen opposition from South Africa, including its mines minister.<\/p>\n<p>RBC\u2019s Kaan Peker said in a note yesterday that BHP would likely need to offer more than \u00a330\/sh to nab the deal, but would need to find over US$11bn of\u00a0 synergies to make it worthwhile.<\/p>\n<p>He estimates synergies of just US$4.1-6.8bn, with significant negative synergies from the spinout of the Kumba Iron Ore and AmPlats divisions.<\/p>\n<h2>Long term value<\/h2>\n<p>There are three big prizes for BHP in its Anglo bid. Principal to that is Anglo\u2019s copper assets in Peru and Chile, which despite recent output issues, are among the largest and cheapest to operate mines in the global cost curve.<\/p>\n<p>If analyst predictions of US$12,000\/t copper come to fruition, BHP\u2019s move could look prescient.<\/p>\n<p>On top of that Anglo\u2019s high grade Minas Rio iron ore mine in Brazil and met coal assets in Queensland are attractive to BHP.<\/p>\n<p>\u201cThe combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American\u2019s portfolios,\u201d Henry said.<\/p>\n<p>\u201cIn putting forward a revised proposal, we have been guided by our capital allocation framework and our view of the fundamental value of Anglo American and BHP.<\/p>\n<p>\u201cThe combination is consistent with BHP\u2019s strategy and the revised proposal is underpinned by a focus on delivering long term fundamental value.\u201d<\/p>\n<p>Anglo\u2019s rejection was swift and expected, with chairman Stuart Chambers saying it fails to \u201crecognise the value inherent in Anglo American\u201d.<\/p>\n<p>But at the same time, his comments provide a hint at where the sticking points may be resolved.<\/p>\n<p>\u201cAnglo 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,\u201d Chambers said.<\/p>\n<p>\u201cThe 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.\u201d<\/p>\n<p>In short, Anglo\u2019s board knows what BHP is after and wants more for it. There\u2019s another wrinkle they\u2019ve pointed out \u2014 the approvals timeline with the South African Government could be protracted and difficult when it comes to the spinouts of AmPlats and Kumba.<\/p>\n<p>\u201cThis 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,\u201d Anglo noted.<\/p>\n<p>\u201cIn 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.<\/p>\n<p>\u201cSome 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.\u201d<\/p>\n<p>Anglo shares hit a record \u00a341.68\/sh in mid-2022 as commodity prices surged after Russia\u2019s invasion of Ukraine, but fell to as low as \u00a317 after revealing a massive drop in copper guidance in December.<\/p>\n<p>$220bn capped BHP is down almost 15% YTD, but at $43.16 its shares are less than 20% off all time highs hit amid an iron ore boom in mid-2021.<\/p>\n<p>\u00a0<\/p>\n<h2>BHP (ASX:BHP) share price today<\/h2>\n\n<p><span class=\"mce_SELRES_start\"><\/span><\/p>\n<h2>Mining sags as investors indifferent to BHP bid<\/h2>\n<p>All that amounted to a bare 0.3% drop for BHP, with investors clearly sensing more water to flow under this bridge.<\/p>\n<p>It fell roughly in line with the rest of the Materials sector, which fell 0.4% as of 3.15pm AEST.<\/p>\n<p>Aussie mining investors will also be waiting for cues from tonight\u2019s Federal Budget, which is likely to feature a major component focused on critical minerals and renewable tech.<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Today\u2019s Best Miners <\/strong><strong><\/strong><\/h2>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/alumina-awc\/\" target=\"_blank\" rel=\"noopener\">Alumina (ASX:AWC)<\/a> (alumina)\u00a0 +6.8%<\/p>\n<p><strong><a href=\"https:\/\/stockhead.com.au\/company\/wa1-resources-wa1\/\">WA1 Resources (ASX:WA1)<\/a> <\/strong> \u00a0(niobium) +3.4%<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Today\u2019s Worst Miners <\/strong><strong><\/strong><\/h2>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/deep-yellow-dyl\/\" target=\"_blank\" rel=\"noopener\"><strong>Deep Yellow (ASX:DYL)<\/strong> <\/a>(uranium) -2.7%<\/p>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/ramelius-resources-rms\/\" target=\"_blank\" rel=\"noopener\"><strong>Ramelius Resources (ASX:RMS) <\/strong><\/a>(gold) -2.2%<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h2>Monstars share prices today<\/h2>\n\n<p><span class=\"mce_SELRES_start\"><\/span>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h2>ASX 300 Metals and Minings Index today<\/h2>\n\n<p><span class=\"mce_SELRES_start\"><\/span>\u00a0<br \/>\n<span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/resources\/monsters-of-rock-bhp-knocked-back-again-in-anglo-approach\/\">Monsters of Rock: BHP knocked back again in Anglo approach<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>BHP (ASX:BHP) has been knocked back again in its bid to acquire Anglo American, facing a stiff block from the London-listed miner\u2019s board after tabling <a href=\"https:\/\/economicherald.net\/?p=9629\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":9630,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9629","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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