BHP Billiton’s takeover of Anglo American has failed for the second time in less than a year. The Anglo-Australian BHP Group, the largest company in the world in the mining sector, has once again abandoned the plan to acquire its competitor Anglo American Plc, launched for the second time in an attempt to interrupt the marriage with the Canadian Teck Resources. An operation that would lead to the creation of a global giant in the copper sector, a strategic raw material for its key role in electrification.
After advances made over the weekend, BHP announced this morning that it had abandoned the project for the second time. While reiterating that a combination “would have a strong strategic rationale and created significant value for all stakeholders”, BHP expressed confidence in its organic growth strategy.
The flop of BHP Billiton’s second proposal
BHP Billiton had attempted an overture towards Anglo American in recent days, about three weeks before the meetings of Anglo American and Canadian Teck Resources, which should approve the union of the two companies, announced last September and aimed at creating a giant in the copper sector worth 60 billion dollars.
But the competing deal also boasted big numbers, as BHP Billiton is worth about $130 billion and Anglo American is valued at more than $41 billion.
BHP had presented a mixed proposal, in shares and cash, which Anglo American’s management should have evaluated as an alternative to the proposal it had put forward for Tech Resources.
Last year’s failed attempt
BHP had attempted to acquire Anglo American last year, putting on the table 49 billion dollars, in a rather complex operation that involved a dismemberment of Anglo American before the merger and the sale of the stakes in two South African companies.
A proposal that Anglo American rejected, considering it too complex and not capable of adequately evaluating its activities. Management then initiated a broad restructuring plan, which led to the sale of the South African platinum operations, while those in coal and diamonds were retained.
Anglo American remains a very attractive prey in a mining sector that has been undergoing consolidation for years, precisely due to its activities in the copper sector.
Distances have grown
Over the past year, Anglo American shares have performed better than those of BHP Billiton, having risen 11% in London, while BHP Billiton, listed on the Australian market, has lost around 10%. A divergent performance that could make an agreement on the valuation even more difficult.
Anglo American, in September, presented a zero-premium offer for Canadian Tech Resources, which is worth around $19 billion. The offer was presented as a proposition capable of generating significant value for both companies by combining their two huge copper mines in Chile.
