Many Wall Street agencies believe that BHP Billiton is expected to reach a deal to acquire British and American resources, but BHP Billiton and Anglo-American Resources may need to make employment or other commitments in South Africa to ease local government concerns.
The epic mining takeover case ushered in new developments.
According to reports, after increasing the acquisition price, BHP (BHP) is one step closer to acquiring Anglo American Resources (Anglo American).
This week, BHP Billiton raised its bid to acquire all of its shares in Anglo-American Resources to £38.6 billion (US$49.18 billion), a significant increase from the previous two offers of £31.1 billion and £34 billion. However, it still insists that British and American Resources divest the South African iron ore and platinum business first.
Although Anglo-American Resources rejected BHP Billiton's third acquisition proposal, they agreed to negotiate and extend the offer deadline by one week.
According to people familiar with the matter, the differences between the two sides over valuation issues are narrowing. The main difficulty is the complexity of the South African business of divesting British and American resources.
Many Wall Street agencies believe that BHP Billiton is expected to reach a deal to acquire British and American resources, but BHP Billiton and Anglo-American Resources may need to make employment or other commitments in South Africa to ease local government concerns.
ABN AMRO Global Resources Fund Manager Elliot told the media:
British and American resources must accept BHP Billiton's greatly increased offer. British and American Resources shareholders can not only obtain seriously undervalued shares of BHP Billiton, but also continue to share many of the world's best quality mines and the huge synergy effects after the merger.
Australian asset management company Platypus told the media that British and American Resources agreed to extend the negotiation period, which shows signs of submission. The agency believes the deal will eventually be reached.
However, the agency also warned that regulatory resistance could still cause the acquisition to fall short:
We weren't happy with this deal, and we weren't happy with the price. Price is secondary, and what is really unsettling is the scale of a deal and the complexity of trying to profit from it. History tells us that large-scale mergers and acquisitions face a lot of resistance.
Currently, according to BHP Billiton's offer, Anglo-American Resources is valued at around £30.24 per share, while Anglo-American Resources closed at less than £27 on Wednesday. Australian-listed BHP Billiton fell about 3% on the last trading day to close at $44.84.