Anglo American rejects improved £34bn offer from BHP

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Anglo American has rejected a revised takeover proposal from rival BHP that values it at £34bn, setting the stage for a potential hostile takeover battle between two titans of the global mining industry.

BHP’s new proposal valued its smaller London-listed rival at £27.53 per share, up from approximately £25 per share in last month’s original proposal, the Australian group said on Monday.

The revised all-share bid from BHP represented a 15 per cent increase in the merger ratio compared with its previous proposal.

BHP proposed a £31bn takeover of Anglo last month that would have transformed the mining industry and ranked as the sector’s largest-ever deal.

Anglo rejected the revised offer on May 13, BHP said, adding that it was “disappointed that the Anglo American board has chosen not to engage”. BHP has until next Wednesday to decide whether to make a formal offer.

BHP chief executive Mike Henry said the “win-win” proposal would have lifted Anglo shareholders’ aggregate ownership in the combined company to 16.6 per cent, compared with 14.8 per cent under the first indicative offer.

“We are disappointed that this second proposal has been rejected,” he said.

BHP said it “continues to believe that a combination of the two businesses would deliver significant value for all shareholders”.

The announcement by BHP puts Anglo’s chief executive Duncan Wanblad on the back foot a day before an industry conference in Miami.

The new proposal maintained a provision requiring Anglo to spin off two South African businesses before the transaction — something that has provoked a backlash from Pretoria.

Anglo rejected the first BHP offer as “highly unattractive” and said it “significantly undervalued” the company.

The driver of the bid is Anglo’s prized copper mines. A merger between the two groups would create the world’s biggest producer of copper, a metal critical for the world’s efforts to decarbonise.

Anglo shares fell 0.5 per cent to £27.58.

Anglo declined to comment.

This is a developing story