The BHP Group Ltd (ASX: BHP) share price is under the spotlight after the ASX mining share announced it wouldn’t be making a bigger bid for Anglo American.
BHP walks away from Anglo American
BHP’s revised offer of 0.8866 BHP shares per ordinary Anglo American share was rejected on 22 May 2024 and it’s not going to make a larger offer. It had requested an extension of talks with the UK-listed miner, UK takeover laws required BHP to make an offer or walk away.
The ASX mining giant said it was disappointed the Anglo American board decided not to continue discussions to resolve its concerns about implementing the takeover, particularly in relation to South Africa.
BHP had been engaging with Anglo American on these topics since its revised offer on 20 May.
The ASX miner said Anglo American’s belief that value risk under BHP’s proposal would be “exclusively for the account of Anglo American shareholders is not accurate”. BHP said its intent was to share in the cost associated with certain conditions that may be imposed by South African regulatory approvals.
Management comments
Mike Henry, BHP CEO, said:
BHP will not be making a firm offer for Anglo American. BHP is committed to its Capital Allocation Framework and maintains a disciplined approach to mergers and acquisitions.
While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and, despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.
We remain of the view that our proposal was the most effective structure to deliver value for Anglo
American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.
Final thoughts on the BHP share price
It’s good that BHP stuck to its limits and didn’t pay too much. There are other opportunities for BHP to find other copper projects, whether through exploration of acquiring another business.
I wouldn’t be surprised if BHP shares rose/outperformed over the next week because the market may have been discounting the business amid its all-share offer for Anglo American.
I don’t think BHP shares are a buy at this stage because the iron ore price isn’t at fearful prices (of under US$100 per tonne). I like iron miners when they’re at cyclical lows. There are other ASX dividend shares I’d rather buy for income.
