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anglo american rejects improved £34billion takeover bid from rival bhp
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Anglo American rejects improved £34billion takeover bid from rival BHP

Mining heavyweight Anglo American has rejected a second, increased takeover bid from industry rival BHP of £34billion. BHP expressed its frustration in a market announcement, stating it was “disappointed” after the South Africa-headquartered Anglo American turned down what would have been the sector’s biggest deal in the sector in a decade. In late April, Anglo American had dismissed a similar proposition that pegged its worth around £31billion, with the firm’s board unanimously deciding it underestimated the company’s true value. The latest bid not only raised the valuation but also proposed to increase Anglo American shareholders’ slice of the merged entity to 16.6%, a leap from the initial 14.8%. BHP laid out the terms, offering £27.53 per share, which included shares in subsidiaries: £4.86 in Anglo Platinum and £3.40 in iron ore division Kumba. However, Anglo American’s chairman Stuart Chambers stood firm, asserting “The latest proposal from BHP again fails to recognise the value inherent in Anglo American. Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive.” If the deal had gone through, it would have dealt another blow to London’s stock market by stripping away one of its crown jewels, as Anglo American is a stalwart of the FTSE 100 index. Despite being listed on the London Stock Exchange, Anglo American’s roots are firmly planted in South Africa, where it was founded and still has its headquarters. Mining minister Gwede Mantashe reflected on BHP’s previous merger with South African miner Billiton back in 2001, saying it “never did much” for the country after the initial offer was turned down. The Public Investment Company, owned by the South African government, is Anglo American’s biggest shareholder with a 7% stake in the company. The takeover tussle has also sparked reports that Swiss mining giant Glencore and British-Australian titan Rio Tinto might alsao make approaches. Anglo American’s vast reserves of copper is a key driver in the business, given the metal’s crucial role in green tech like solar farms and electric vehicles. With S&P Global projecting that copper demand could double by 2035, potentially leading to supply gaps, the stakes are high. The takeover would create the world’s biggest copper miner, with around 10% of global output. BHP’s chief executive Mike Henry said he and the other directors “strongly believe (the offer) would be a win-win for BHP and Anglo American shareholders”. “BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world-class businesses.” “The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets. The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American’s portfolios.”

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