Recent reports indicate that BHP Billiton PLC's second attempt to acquire Anglo American has failed despite offering a premium exceeding 20%.
On December 1, media sources revealed that BHP's bid reached approximately £40 billion (around $53 billion), but Anglo American's board ultimately rejected the offer. Insiders disclosed that BHP's latest proposal valued Anglo American at about £34 per share, representing a 24% premium over its closing price of £27.36 on November 20.
BHP submitted a detailed proposal to Anglo American's board on November 20, primarily structured as a stock-based offer with a cash component. However, Anglo American concluded that its ongoing plan to acquire Canada's Teck Resources would generate greater value. Additionally, concerns over prolonged regulatory approvals for a BHP deal influenced the decision.
Sources cited two key reasons for Anglo American's rejection: First, the merger with Teck Resources was deemed more value-accretive. Second, regulatory hurdles for a BHP transaction could introduce significant uncertainty, with potential share price volatility affecting the final deal terms.
Notably, BHP's offer represented a nearly 50% premium to Anglo American's closing price on September 7, before the Teck merger announcement. On Monday, Anglo American's London-listed shares rose nearly 3% intraday before closing 1.1% higher at a late-October peak. BHP's UK shares gained 0.8%, bringing its year-to-date increase to about 13%.
BHP confirmed negotiations in a December 1 statement but stated it "no longer considers a merger between the two companies viable." The failed bid coincides with Anglo American and Teck shareholders' December 9 vote on their merger—a timing analysts interpret as BHP's strategic move to disrupt the deal.
The £40 billion pursuit underscores fierce competition among miners for premium copper assets, whose strategic importance grows amid global energy transition demands for grid infrastructure and EVs.
Barrenjoey analyst Glyn Lawcock described BHP's move as a "final roll of the dice" to secure Anglo American's coveted South American copper portfolio. He noted that Anglo American's restructuring and Teck merger plans altered BHP's calculus after last year's failed takeover attempts.
The battle centers on copper reserves, with Anglo American long seen as a target due to its attractive copper assets. A successful Teck merger would create a top-five global copper producer, unlocking synergies from adjacent Chilean Andean mines.
Since the Teck deal announcement, major miners including BHP, Rio Tinto, and Glencore have evaluated options. BHP CEO Mike Henry emphasized the "compelling strategic rationale and value creation" of an Anglo American merger in statements.
BHP's swift withdrawal signals reluctance to engage in a costly bidding war. Bankers expressed surprise at its abrupt exit: "We expected them to return and close the deal—this reversal is unexpected."
This marks BHP's second setback due to Anglo American's operational complexity. Last year, multiple bids requiring Anglo to spin off Australian coal, diamond, and platinum units were rejected as "highly unattractive and convoluted."