Takeover target Anglo American has agreed to enter talks with suitor BHP after rejecting the Australian miner’s latest £39billion offer.
The London-listed firm, whose empire includes De Beers diamonds and a potash mine in Yorkshire as well as vast copper and iron ore deposits, has given its larger rival another week to thrash out the terms of a deal.
It marked a significant concession by the Anglo board, which until recently had refused to engage with BHP, having rebuffed two earlier bids worth £31billion and £34billion.
The decision to enter talks could pave the way for a deal to be agreed.
Anglo yesterday said that it also turned down the third offer as it again included a demand for the sale of its South African business, which has become a major stumbling block.
Takeover target: Anglo American – whose empire includes De Beers diamonds – has given its larger rival BHP another week to thrash out the terms of a deal
It comes a week after the FTSE 100 company revealed its own ‘radical’ restructuring to break itself up in a bid to fight off the takeover attempt.
BHP, the world’s largest listed miner, now has until 5pm on Wednesday, May 29 to make a formal bid or walk away from a merger that would be the largest ever mining sector deal.
City analysts previously said a bid of £40billion or more could seal a takeover.
Anglo chairman Stuart Chambers said the board rejected the offer as it ‘does not address concerns about the structure’.
He said the bid was too complex and placed too much risk on Anglo shareholders.
Under BHP’s proposals, it would spin off Anglo’s South African platinum and iron ore units before buying the remaining assets, including its coveted copper mines in Peru and Chile.
Anglo has estimated that this could take more than 18 months. ‘Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues,’ Chambers said.
‘However, the board is willing to continue to engage with BHP and its advisers on this topic,’ he added.
BHP said that it has ‘made progress’ on the issue and was ‘hopeful that a resolution will be reached in the next seven days’.
Chief executive Mike Henry said: ‘BHP looks forward to engaging with the board of Anglo American to explore this unique and compelling opportunity to bring together two highly complementary, world-class businesses.’
Anglo has itself unveiled plans to spin off the Johannesburg-listed platinum unit but wants to hold on to its Kumba iron ore business.
Under proposals for Anglo to remain a stand-alone company, it would also sell diamond arm De Beers and its steel-making, coal and nickel businesses.
Meanwhile, the future of its Woodsmith mine in North Yorkshire is at risk.
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