In a decisive action, Anglo American‘s Board has once again rejected BHP Group Ltd.‘s takeover bid, citing the proposal’s inability to fulfill shareholder value expectations. The impasse reached a critical point as the deadline for the “put up or shut up” (PUSU) extension approached, with Anglo American unwilling to give any more leniency.
The story began on May 22, when Anglo American‘s board unanimously rejected BHP‘s third unsolicited proposal. Despite the denial, the Board initially extended the PUSU deadline by seven days, giving BHP till 5:00 p.m. on May 29 to address the inherent risks and value implications of their plan.
Extensive talks proceeded, with emphasis on the suggested structure’s execution and value risks. BHP‘s offer, which was unchanged from prior rejections, required Anglo American to divest its entire stake in Anglo American Platinum and Kumba Iron Ore as a condition for the all-share buyout, with each transaction dependent on the others.
The Board emphasised the unique nature of carrying out a takeover concurrently with two demergers, as well as the additional regulatory approvals and substantial conditions that are anticipated to be imposed. These conditions might severely depreciate Anglo American Platinum and Kumba, reducing shareholder returns.
On May 28th, BHP proposed a limited set of socioeconomic initiatives to assist regulatory approvals. However, the Board determined that these efforts were insufficient to offset the disproportionate execution and value risks that Anglo American stockholders would face.