Benzinga - by Stjepan Kalinic, Benzinga Staff Writer.
BHP Group (NYSE:BHP) secured a one-week extension on its proposed takeover of Anglo American (OTCQX:AAUKF).
This development came just hours before a deadline mandated by UK takeover regulations, which would have forced BHP to either submit a formal bid or withdraw for at least six months.
BHP submitted three unsolicited, conditional proposals, each with the same caveat: Anglo American would be required to execute two complex demergers of its prized South African assets — Anglo American Platinum and Kumba Iron Ore.
“The latest proposal does not address the board’s concerns about the complexity, execution risks, and extended timeline associated with the demergers. This raises the possibility of significant value leakage that could disproportionately harm Anglo American shareholders,” said Anglo American chairman Stuart Champers, raising concerns regarding this offer's structure.
Interestingly, BHP’s latest offer coincided with public pressure applied by Anglo American’s second-largest shareholder, the Public Investment Corporation (PIC) of South Africa. Shortly before the initial deadline, PIC issued a statement advocating for a “meaningful revision” of BHP’s offer.
"The PIC recognizes the positive impact of Anglo American in the South African economy and the region at large, and the company's role in this regard should not be diminished as a result of the proposed offer by BHP," the statement said.
Despite rejecting BHP’s latest proposal, Anglo American agreed to a one-week extension, pushing the deadline to May 29th. This scenario provides BHP with an opportunity to potentially address Anglo American’s concerns and refine their offer.
However, Anglo American has not been idle. In response to BHP’s initial takeover attempts, they unveiled their own restructuring plan focusing on exiting non-core businesses like platinum, diamonds, and coal.
The company's $9 billion Woodsmith fertilizer project remains under a big asterix as the management searched for a prospective partner for months. Facing the investment slowdown, the project could be in jeopardy in case of BHP's takeover, since the mining leader already has a similar $10 billion ongoing project in Canada.
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