Acquisition ambitions thwarted: BHP rejected for the second time, officially withdrawing from the Anglo American acquisition battle

The latest attempt by BHP, the world's largest mining company, to acquire its rival Anglo American has officially failed, marking the end of a brief and dramatic standoff for the Australian mining giant.

BHP released a statement on Monday, confirming that it had engaged in preliminary discussions with Anglo American but stated that it would "no longer consider the merger of the two companies." According to media reports citing informed sources on Sunday, the Anglo American board rejected BHP's latest acquisition proposal after evaluation, believing that its terms were inferior to the merger plan with Teck Resources that the company is advancing.

This acquisition turmoil occurred at a critical juncture. Shareholders of Anglo American and Teck Resources are set to vote on their merger plan on December 9. If the deal is approved, it will create a new giant with a market value exceeding $60 billion. BHP's sudden intervention and swift exit directly impacted market expectations for this industry consolidation drama.

BHP's actions reflect the entire mining industry's thirst for quality assets, especially copper mines. As the global energy transition and electrification process accelerate, demand for copper is expected to continue rising, while supply is increasingly tight, making companies with quality copper mine assets hot acquisition targets. BHP's stock price rose 1.3% in the Sydney market on Monday but subsequently gave back most of its gains.

The Timing of the "Final Gamble" Acquisition

BHP chose to act on the eve of the Anglo American-Teck Resources merger vote, which market analysts view as a carefully planned "final gamble." According to media reports citing a person directly familiar with the discussions, it was the December 9 voting deadline that prompted BHP to propose an alternative plan to Anglo American.

Barrenjoey analyst Glyn Lawcock described this move as BHP's "last roll of the dice," aimed at acquiring the South American copper assets of Anglo American that it has long coveted. He pointed out that after last year's failed acquisition, the merger plan between Anglo American and Teck Resources, along with its own asset restructuring, changed the considerations of BHP's board.

However, BHP's rapid exit also indicates that it has no intention of launching a costly bidding war or making an "aggressive" acquisition. Glyn Lawcock stated:

"If you are BHP, you wouldn't want to regret not trying."

An anonymous banker also expressed surprise, stating:

"I thought they would come back to complete it, but after coming back, they didn't stick to it, which is quite unexpected."

Copper Assets: BHP's Core Target

The core of this acquisition battle lies in the competition for copper assets. BHP and other mining giants view copper as key to future growth. Copper is a critical raw material for the infrastructure needed for the energy transition (such as power grids, electric vehicles, and renewable energy equipment), and its strategic value is increasingly prominent The reason why Anglo American has long been viewed as a potential target for industry giants is its highly attractive copper asset portfolio. If it successfully merges with Teck Resources, it will create one of the top five copper producers in the world. Notably, the two companies own adjacent copper mines at the foot of the Andes Mountains in Chile, and the merger would bring significant synergies. Since the announcement of the merger plan, the world's largest miners, including BHP, Rio Tinto, and Glencore, have been evaluating their options.

BHP's CEO Mike Henry led the company in a statement that did not disclose the details of the proposal but emphasized that "the merger with Anglo American has strong strategic advantages and can create significant value for all shareholders."

A Complex Acquisition Target

Despite having attractive copper mines, Anglo American has been a complex acquisition target. Its diversified asset portfolio includes relatively niche businesses such as diamonds and platinum, which has deterred many potential buyers who prefer to acquire pure copper mining operations.

This is not the first time BHP has faced setbacks due to its complexity. Reports indicate that BHP made multiple acquisition offers last year, all of which were rejected. The proposals at that time were predicated on Anglo American first spinning off or selling its coal, diamond, and platinum businesses in Australia. Anglo American dismissed the proposal as "highly complex and unattractive." Subsequently, Anglo American initiated some business restructuring on its own, divesting its platinum business.

With BHP's formal exit, the path for Anglo American and Teck Resources to merge has become clearer. BHP stated in its announcement that the company is "confident in the tremendous potential of its organic growth strategy" and will focus on its existing business. In this acquisition attempt, Lazard Inc., UBS, and Barclays served as advisors to BHP. The market's focus will now shift to the upcoming shareholder vote and the regulatory approval process for the merger in the United States and Canada