BHP-Anglo merger talks end

BHP has confirmed it will not pursue a new takeover bid for Anglo American, ending speculation about a potential revival of last year’s $74 billion merger proposal.

“Following preliminary discussions with the board of Anglo American, BHP confirms that it is no longer considering a combination of the two companies,” BHP said.

The announcement comes as Anglo shareholders prepare to vote on December 9 on a proposed merger with Canadian miner Teck Resources.

Analysts say this deal has weakened BHP’s position, as Teck holds the right to match any unsolicited offer for Anglo, while Anglo would face a $US330 million ($510 million) break fee if it abandons the merger in favour of a superior proposal.

The decision marks the end of a year-long saga in which BHP sought to combine with Anglo American to further its position as the world’s largest mining company.

The initial proposal, valued at $74 billion, faced resistance over its complex structure, including proposed demergers of Anglo American Platinum and Kumba Iron Ore.

BHP had presented several informal bids, but Anglo remained unconvinced, citing “significant execution and completion risks relating to both value and time.”

On May 29, in response to Anglo American, BHP said it won’t put forward a fourth takeover offer. BHP chief executive officer (CEO) Mike Henry expressed his disappointment.

“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,” BHP chief executive officer Mike Henry said.

While BHP won’t be acquiring Anglo American and Anglo looks to takeover Teck Resources, it seems copper will be at the heart of both companies’ strategies going into the future as the world transitions to renewable energy.