A 24% premium still failed! BHP was reported to have offered £40 billion but was rejected, Anglo American insists on its own merger plan

Recent news shows that despite a bid premium exceeding 20%, BHP, the world's largest mining company, has failed in its second attempt to acquire Anglo American.

On December 1st, Eastern Time, media reported that BHP's offer reached approximately £40 billion (about $53 billion), but was ultimately rejected by the board of Anglo American. Insiders revealed that BHP's latest acquisition bid was around £34 per share, representing a premium of about 24% over Anglo American's closing price of £27.36 on November 20th.

BHP sent a detailed proposal to the board of Anglo American on November 20th, with the offer primarily in stock form, along with some cash. However, Anglo American, after evaluation, believed that its ongoing acquisition plan for Teck Resources could create greater value, while also being concerned about the lengthy regulatory approval process that a deal with BHP might face.

Insiders indicated that the main reasons for Anglo American's rejection of BHP's £40 billion offer included two aspects. First, Anglo American believes that merging with Teck Resources could generate greater value; second, there are concerns that the regulatory approval process for a deal with BHP could be too lengthy, during which BHP's stock price fluctuations could significantly impact the final transaction value.

It is noteworthy that BHP's bid represents a premium of nearly 50% over the closing price the day before the announcement of the Teck Resources merger on September 8th. Anglo American's stock price listed in London rose nearly 3% when it hit a daily high on Monday, closing up nearly 1.1%, marking a new closing high since the end of October. BHP's shares rose 0.8% on Monday, with a cumulative increase of about 13% this year.

BHP issued a statement on November 24th confirming that discussions had taken place but stated that it "no longer considers the merger of the two companies." This failed acquisition comes at a critical time when shareholders of Anglo American and Teck Resources are set to vote on the merger plan on December 9th. The scale of this bid reflects the fierce competition among mining companies for high-quality copper assets, as the global energy transition accelerates, with copper becoming increasingly strategic as a key raw material for infrastructure such as power grids and electric vehicles.

An article from Wall Street Journal mentioned last week that BHP's decision to act just before the merger vote is seen by the market as a carefully planned ambush. The December 9th voting deadline prompted BHP to propose an alternative to Anglo American.

Barrenjoey analyst Glyn Lawcock described this move as BHP's "last throw of the dice," aimed at acquiring the coveted copper assets of Anglo American in South America. 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, has changed the considerations of BHP's board.

The core of this acquisition battle lies in the competition for copper assets. Anglo American has long been viewed as an acquisition target precisely because it possesses an attractive portfolio of copper assets. If the merger with Teck Resources is successful, it would create one of the top five copper producers globally, with significant synergies arising from the adjacent copper mines in the Andes Mountains of Chile Since the announcement of the merger plan, global mining giants including BHP, Rio Tinto, and Glencore have been evaluating their respective options. BHP CEO Mike Henry emphasized in a statement that "the merger with Anglo American has strong strategic advantages and can create significant value for all shareholders."

BHP's swift exit indicates that it has no intention of launching a costly bidding war. Last week, a banker expressed surprise at BHP's announcement to withdraw from the acquisition battle: "I thought they would come back to complete it, but after returning, they didn't stick to it, which is quite surprising."

This is the second time BHP has been thwarted by the complexity of Anglo American's business. Last year, BHP made multiple acquisition offers that were rejected, with the proposal requiring Anglo American to first spin off its Australian coal, diamond, and platinum businesses, which was dismissed by Anglo American as "highly complex and unattractive."

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