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BHP’s shovel keeps hitting everything but pay dirt in its attempts to buy rival miner Anglo American.
The Australian miner on Wednesday returned just ahead of a UK Takeover Panel deadline with a third and “final” offer — already rejected by Anglo. The 9 per cent bump, to a share ratio of 0.886 BHP shares for each of Anglo’s, was a modest one. Given the same complex structure — which offers Anglo investors part of the deal consideration via the spin outs of its listed platinum and iron ore subsidiaries in South Africa — not much has changed.
For a start, what BHP meant by its “final offer ratio” was unclear. The language came with a footnote suggesting that BHP “reserves the right to increase and/or otherwise improve the Final Offer Ratio if” a better offer comes along from another party or with the agreement of the Anglo board. If BHP meant that the price, value and structure of its offer would not be changing, it should have said so categorically — and been compelled to by the UK takeover watchdog.
That would lock BHP into a deal structure that the Anglo board has been clear it finds unacceptable, because it leaves its investors exposed to unknown risks and costs in separating the company. The deal, worth about £38.6 billion, is pitched at a 49 per cent to where Anglo’s shares closed before the first approach became public.
That premium, at least, has been enough to generate some interaction between the two sides: an extension to the Takeover Panel’s deadline will allow a week of duelling over how to mitigate the “risks and value impact” of BHP’s proposal. BHP argues that Anglo has handled this sort of restructuring before. Anglo counters that easy to do is easy to say.
The share prices tell a story. Anglo’s fluttered briefly before dipping modestly, despite the higher offer. BHP’s London share price slid 4 per cent, after climbing all month. Meanwhile, Anglo’s second-largest shareholder South Africa’s state-owned Public Investment Corporation had earlier in the day demanded a “meaningful revision” to BHP’s previous proposal — something the latest effort arguably doesn’t meet.
The word “final” is generally held sacrosanct in UK takeovers, a standard that this announcement failed to meet. Still, the outcome appears to be another week of wrangling over now well-known issues — most likely, with the same end result.
alan.livsey@ft.com
