BHP (ASX:BHP) Group has withdrawn its US$74 billion (A$111 billion) takeover bid for Anglo American (JO:AGLJ), ending a six-week pursuit after the former rejected a request to extend the UK regulator deadline on Thursday morning.
The decision saw shares of Anglo American fall 3% at 4:40pm London time while BHP’s stock price rose 0.2%.
In a statement to the UK stock exchange shortly before the market closed in London on Wednesday, BHP chief executive Mike Henry said, “BHP will not be making a firm offer for Anglo American. BHP is committed to its Capital Allocation Framework and maintains a disciplined approach to mergers and acquisitions.”
Henry expressed disappointment, noting that the proposal was “a compelling opportunity” to generate value for both sets of shareholders.
“We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and, despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.
“We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.’’
‘Highly complex and unattractive’
Anglo American found the offer 'highly complex and unattractive', stating that BHP’s conditions for the takeover included divesting its South African assets Kumba Iron Ore and Anglo American Platinum, which it deemed would expose shareholders to changing government conditions.
“This approach does not sufficiently address the fact that Anglo American’s shareholders would bear disproportionate execution and value risks and uncertainty over an extended period, nor does it consider that material conditions would likely be imposed in relation to both Anglo American Platinum and Kumba which would require the approvals of their respective board,” Anglo said in a statement.
Anglo’s board unanimously concluded there was “no basis for a further extension” after extensive shareholder engagement.
Earlier on Wednesday, Anglo American had refused BHP’s request for an extension of talks. Anglo’s board ultimately decided not to seek another week’s extension from the UK Takeover Panel.
BHP had stated it would not make a firm offer without reasonable due diligence into Anglo’s assets. Anglo responded that BHP’s measures to secure regulatory approvals did not sufficiently mitigate the execution and value risks for its shareholders.
In a statement to the Australian market, BHP reiterated its efforts to address Anglo’s concerns, including offering a “reverse break fee” to mitigate risks for Anglo shareholders.
“BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination,” the company said.