BHP says Anglo American shareholders must decide merger fate

BHP boss Mike Henry has challenged Anglo American’s shareholders to decide the best team to maximise returns after Anglo unveiled a new strategy to sell mines and focus on three key materials – a plan Henry described as a “variant” of BHP’s own takeover proposal.

Less than 24 hours after BHP revealed it had put a revised bid to Anglo’s board, the London-based miner’s chief executive, Duncan Wanblad, revealed a massive restructure.

Anglo plans to sell its Queensland metallurgical coal mines, offload De Beers diamonds and its platinum business, and focus purely on copper, iron ore and crop nutrients. Wanblad on Monday accelerated decisions the company has been considering for years to engineer a turnaround in an attempt to thwart BHP’s second takeover offer.

The world’s largest miner is proposing to swap each Anglo share for 0.8132 of its shares. Monday’s bid is worth $64.4 billion, but Anglo says that undervalues its business and BHP’s plans to demerge its iron ore and platinum business before the takeover are too complicated.

BHP wants Ango to spin off its Kumba Iron Ore and Anglo American Platinum business before merging the two companies. The demerger would mean Anglo gives all its holdings in the two companies to its existing shareholders before the businesses are combined, and shield BHP from two potentially tricky operations.

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Henry told investors at the Bank of America’s mining conference in Miami overnight (Australian time) that both sets of shareholders would benefit from significant synergies if the merger went ahead.

“Shareholders know opportunities don’t come along like this for shareholders that often in the resources sector,” Henry said. “At the end of the day, it’s going to be up to [Anglo] shareholders.

“They’ve got to look at the respective plans, decide which one they believe is going to create the greatest value soonest, and they have to make a determination as to the likelihood of execution of those plans, including which team they believe is more capable and has a better track record of execution. It’s that simple.