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LONDON — Mining giant BHP Group on Wednesday said it would not be making a firm offer for Anglo American, shortly after the latter rejected a request to extend takeover talks.
In a statement published Wednesday afternoon, BHP CEO Mike Henry said that the firm did not intend to make a formal offer for its London-listed rival.
“While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of 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,” Henry said in a statement.
“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,” he added.
The miners had until 5 p.m. London time to reach an agreement following a week-long extension of last week’s deadline.
BHP requested a further prolongment of talks earlier in the session, saying it “believes a further extension of the Deadline is required to allow for further engagement on its proposal.” It noted that it had proposed a number of “socioeconomic measures” to address concerns over its bid, but added that more time was needed for discussions.
Anglo American responded that its board “unanimously concluded that there is no basis for a further extension to the [Put Up or Shut Up] deadline.”
BHP’s latest offer had valued the company at £38.6 billion ($49.2 billion), according to previous Primanews calculations.
Shares of Anglo American fell 3% at 4:40 p.m., while BHP’s stock price rose 0.2%.
BHP Group’s bumper takeover proposal is part of an effort to create a copper mining juggernaut and capitalize on the base metal’s critical role in the green energy transition.
Anglo rejected BHP’s previous offers, saying they undervalued the company and its prospects.
The British miner has also raised concerns over demands for it to de-merge from two of its South African entities, which company Chairman Stuart Chambers previously said would create “substantial uncertainty” and executive risk for the company.
The socioeconomic provisions outlined in BHP’s latest offer include investment in a mining research and development facility in South Africa, local employment guarantees and charitable contributions.
It remains unclear whether the proposals will be enough to push the needle on what would be the first mining mega-deal in years.
“It’s a 50-50 right now in my view,” John Meyer, partner and mining analyst at SP Angel, told CNBC’s “Street Signs” on Wednesday.
BHP’s latest proposal does not constitute a formal bid, but Meyers said it was likely that Anglo would need to express agreement before a final offer is made.
“The pressure is on Anglo American to accept an offer. At that point, I think, BHP would then formalize the offer,” he noted.
Anglo earlier this month announced plans to spin off its highly prized De Beers diamond unit, as well as its steelmaking coal, nickel and platinum businesses, as part of a sweeping restructuring of its 107-year-old business.
Anglo CEO Duncan Wanblad said the restructuring was part of existing efforts to “streamline the business and provide greater value to shareholders.” However, he noted that the timeline had been sped up in the face of BHP’s advances.
The takeover offensive paves the way for a return of mega-deals after more than a decade of quiet in the mining industry. Copper’s recent rally has also heightened demand in the space, with BHP rival Rio Tinto similarly expanding its business in the base metal.
— CNBC’s Sam Meredith contributed to this report.
