The Zhitong Finance App learned that after British and American Resources rejected BHP Billiton (BHP.US)'s revised purchase offer on May 13, investors said that BHP Billiton expects to increase its purchase offer for British and American Resources again and possibly increase cash.

On April 25, BHP Billiton proposed an all-share purchase offer to its rival Anglo-American Resources. BHP Billiton valued Anglo-American Resources at £31.1 billion (US$38.8 billion), or £2,508 per share, a 15% premium over its market capitalization of £27 billion (US$33.7 billion). On May 7, BHP Billiton revised its acquisition proposal for Anglo-American Resources, with a valuation of approximately £34 billion (US$43 billion), or £27.53 per share.

However, Anglo-American Resources still rejected the revised takeover offer, saying that although it was nearly 10% higher than the initial offer, it still seriously underestimated the company's value. Additionally, BHP Billiton's revised acquisition offer once again requires Anglo-American Resources to sell its platinum and iron ore business in South Africa. In response, Anglo-American sources said that this structure is unattractive. “The measures in the press release indicate that this is not the best and final offer,” said Todd Warren, a portfolio of Tribeca Investment Partners, which holds shares in Anglo-American Resources.

An investor from BHP Billiton said that in order to complete the transaction, it is reasonable for BHP Billiton to increase the cash portion, but the overall transaction structure is complicated, which increases the risk that the Anglo-American Resource Group will seek acceptable prices for (BHP Billiton) unwanted assets.

Another BHP Billiton investor said he would be surprised if BHP Billiton did not make another takeover offer. He added that the company still has room to increase its cash portion. A third BHP Billiton investor said that the rejection of BHP Billiton's offer by British and American Resources was disappointing, but BHP Billiton was in a difficult situation because it needed to balance the strong rise in copper prices and the need to maintain financial discipline.

Anglo-American Resources has a large copper mining business in South America, and also has deep business in South Africa, including platinum, iron ore, and diamonds. It owns 85% of the world-famous “Diamond King” De Beers. In recent years, copper is an important metal for energy transition and electrification. Demand for copper ore has been rising steadily, and prices have risen accordingly when supply is tight. However, in the past year, the stock price performance of Anglo-American Resources still lagged behind its competitors, mainly due to a major dive in its diamond business.

Due to shrinking market capitalization, Anglo-American Resources has been viewed as a potential acquisition target by large mining companies, especially at a time when most companies in the industry are anxious to increase copper reserves and production. Although Anglo-American Resources has an “attractive” copper business, its complex internal structure and product mix, particularly its business other than copper in South Africa, has deterred some buyers.

If successful, this deal will mark the completion of BHP Billiton's first large-scale acquisition in many years. Over the past few years, under the leadership of CEO Mike Henry, BHP Billiton has rekindled interest in transformational acquisitions.

Jefferies analysts said that BHP Billiton may need to raise the purchase offer to more than £30 per share before getting approval from the Anglo-American Resources Board. The analyst added, “We're just not sure if BHP Billiton is prepared to set the price that high. This latest offer may be the final offer.”