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BHP Group Debates Improved Anglo American Bid as Time Runs Out

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Bloomberg May 20 02:41 · 12.3k Views

Bloomberg has learned that BHP Group is considering whether to make an improved proposal for Anglo American Plc before a deadline this week. Paul-Alain Hunt reports on Bloomberg Television.

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Transcript

  • 00:00 Can you just recap what happened
  • 00:02 last week for viewers that might have missed all the big news there when I think it was Anglo announcing
  • 00:07 its strategic path forward?
  • 00:11 Well, last last week was a very busy week indeed.
  • 00:15 BHP had just made an improved informal offer
  • 00:20 valuing Anglo American at 43
  • 00:23 US billion dollars.
  • 00:25 The structure of that offer
  • 00:28 still would say Anglo have to spin off its
  • 00:31 Amplatz platinum business.
  • 00:33 And of course, it's Kumba, South African iron Ore
  • 00:37 2.
  • 00:38 But
  • 00:39 then Anglo came back.
  • 00:40 Anglo's board came back and announced the results of a strategic review.
  • 00:45 That strategic review had been announced last year, but shareholders were kept in the dark all the way up until last week, when the board finally revealed
  • 00:56 its plan that it would divest its Amplets business.
  • 00:59 It would
  • 01:00 divest its met coal assets in Queensland of Australia,
  • 01:04 divest De Beers and simplify itself into just three areas.
  • 01:10 Of course, the copper would remain,
  • 01:12 the Coomba iron ore business would remain
  • 01:15 and so would the controversial Woodsmith Poly Halite
  • 01:19 business.
  • 01:20 Now, the Woodsmith
  • 01:21 Poly Halite business is a fertilizer
  • 01:24 mine,
  • 01:25 but it's a $9 billion
  • 01:27 CapEx project and Anglo had been spending about a billion dollars
  • 01:32 a year on that.
  • 01:34 As part of the review, Anglo said it would
  • 01:36 calm down with spending.
  • 01:37 It was becoming a bit of a cash sink and would only spend $200 million in 2025
  • 01:44 before not spending anything more on it.
  • 01:47 So it was a it was a massive
  • 01:49 move or pivot by Anglo's board.
  • 01:52 But the message that it sent to BHP was also
  • 01:56 we can divest assets in South Africa
  • 02:00 and elsewhere and get through those regulatory
  • 02:03 approvals.
  • 02:04 So
  • 02:05 BHP may come back.
  • 02:07 The deadline is May 22.
  • 02:10 So over the next three days, there's a chance that they'll come back with a with a higher offer.
  • 02:14 We don't know
  • 02:16 for sure.
  • 02:17 What we can be fairly sure sure of though is that it won't be a formal bid at this stage, not until Anglo's board come to the table.
  • 02:27 Obviously BHP want to do due diligence and without
  • 02:31 being able to do due diligence they won't be putting
  • 02:33 forward a a formal bid.
  • 02:36 Yeah
  • 02:36 hopefully they do.
  • 02:38 So you you mentioned the deadline that's on Wednesday, that's end of
  • 02:41 end of business I believe London,
  • 02:43 London Times.
  • 02:43 What's the state of play and what happens if what happens to BHP if it does walk away then
  • 02:50 well, if it walks away, it's got
  • 02:53 us it it has to leave the table
  • 02:55 for six months.
  • 02:57 If it would have put forward a a binding proposal
  • 03:00 and and go forward with that.
  • 03:03 Obviously the story
  • 03:04 continues there, but but realistically
  • 03:08 it will probably be an informal bid if we see one
  • 03:11 before that Wednesday
  • 03:12 deadline.
  • 03:13 Now if BHP do walk away for six or 12 months,
  • 03:18 that will give Anglo time to start its divestments and
  • 03:22 and and and take action
  • 03:24 on its strategic review.
  • 03:26 But what does that then look like for BHP if it wants to come back to the table there there there is a chance that Anglo
  • 03:34 could see a higher valuation.
  • 03:36 Does BHP really want to pay
  • 03:38 something like a 30% premium
  • 03:40 on the business in in 12 months time?
  • 03:43 So
  • 03:43 a lot at play here.
  • 03:44 The stakes are high.