Anglo American’s break-up could spark a mining bidding war, says top shareholder
Anglo American could find itself at the centre of a bidding war if its management successfully shepherds the firm through a break-up plan, one of the company’s top shareholders has said.
The London-listed miner unveiled a major shake-up plan this morning that would see it carve off its diamond business De Beers and demerge its platinum, nickel and coal divisions.
Bosses at Anglo kicked off a review of its corporate structure last year but have come under pressure from shareholders to publish the plans after rival BHP tabled two bids for the firm.
Under the terms of BHP’s second $43bn (£34bn) offer, Anglo was required to offload its Kumba iron ore operation in South Africa in a bid it rejected as “highly unattractive”.
However, top-ten Anglo American investor Ninety One, which holds a two per cent stake in the £36bn firm, said today the turnaround plans could simplify the business and make it a more tempting asset for a number of industry buyers.
“The plan today creates a longer term way of shrinking and right-sizing the Anglo portfolio, which means it might be interesting for a lot of different mining houses in 12 months time or 18 months time,” Dawid Heyl, a portfolio manager at Ninety One, told City A.M.
“There could be other bidders if it’s a smaller, more digestible entity.”
BHP’s first $31bn offer was quickly rebuffed by Anglo American and the terms of its new bid would still require the firm to offload its iron and platinum division, a move that has been resisted by Anglo’s board.
Heyl added the second bid “didn’t feel like it was a substantial improvement”.
Anglo’s copper assets are seen as the main prize to investors due to their use in everything from electric vehicles to computers. Rivals Glencore and Rio Tinto were also both said to be mulling counter bids for the firm before pulling back.
Shares in Anglo American slumped beyond one per cent after the publication of its restructuring plans this morning, suggesting shareholders favour a takeover.
BHP is widely expected to sweeten its second bid and possibly add cash. The Aussie miner has until May 22 to return with a binding offer or walk away under UK takeover rules.
“The language in the release suggests it’s not the best and final offer,” said Todd Warren, a portfolio manager at Tribeca Investment Partners, which holds Anglo shares.
Heyl added he would be “surprised if BHP gives up at this point”.
“I think they have been very serious in this approach. They were seeing investors and shareholders over the last few weeks,” he said.