Anglo American rejects BHP's extended negotiation request Company 2024-05-30 13:58:23

Anglo American declined BHP's request for more time to continue acquisition talks on May 29, indicating a big likelihood of failure for its six-week pursuit.


Under UK acquisition regulations, BHP was required to either finalize a contract with Anglo American by 5:00 PM on May 29 or temporarily halt its acquisition efforts. One week earlier, the global mining giant had its third offer of over $49 billion rejected by Anglo American, although the latter agreed on a one-week extension to its original May 22 deadline.


A major issue in the acquisition has been the future of Anglo American's platinum and iron ore operations in South Africa, as BHP has been adamant about the divestment of these assets prior to the acquisition.


Founded in Johannesburg in 1917, Anglo American now employs over 40,000 people in South Africa, and the potential divestment could economically impact the region. Analysts from J.P. Morgan have estimated that the acquisition could lead to a $4.3 billion capital outflow from South Africa and weaken the South African Rand.


This deal comes amid South Africa's most competitive national elections since the end of apartheid 30 years ago. Pre-election polls indicated that the ruling African National Congress is likely to secure the most votes, although its share might drop below 50% for the first time, influenced by economic downturns, energy crises, high unemployment, and crime rates.


To appease South African regulators, BHP had previously proposed maintaining staffing levels at Anglo American's Johannesburg office for at least three years, listing BHP shares on the South African market, and sharing the costs of increasing staff in South Africa. On the same day, the mining giant reiterated these commitments.


Analysts suggest that BHP's concessions aim to secure Anglo American's valuable copper assets in South America, a goal openly desired by BHP CEO Mike Henry.


Matthew Haupt, Chief Investment Officer at Wilson Asset Management, a shareholder in BHP, said if negotiations cannot progress in a sincere manner, he was content with BHP ultimately abandoning the merger.


Although he would like to see the merger continue, it is necessary to maintain some discipline.


Anglo is attractive for its prized copper assets in Chile and Peru, a metal used in everything from electric vehicles and power grids to construction, whose demand is expected to rise as the world moves to cleaner energy and wider use of artificial intelligence.


(Writing by Alex Guo  Editing by Harry Huo)
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