BHP stunned as Anglo rejects renewed takeover bid ahead of Teck Resources tie-up

Tawanda Karombo

BHP executives were left surprised after Anglo American rejected a fresh acquisition proposal that the Australian mining giant believed offered improved terms and better reflected the value of the London-listed group.

On Monday, BHP confirmed it had abandoned plans to pursue a combination with Anglo American, whose shareholders are expected to approve the company’s tie-up with Canada’s Teck Resources next month.

“Following preliminary discussions with the Board of Anglo American, BHP Group confirms that it is no longer considering a combination of the two companies,” BHP said on Monday.

The company, said mining industry sources, had timed its latest offer to disturb Anglo American’s tie up process with Teck Resources.

“It was always clear that BHP would come back for Anglo American sooner than later. They were stunned being rejected and now have to focus on a new strategy pivoting on internal growth and acquisition opportunities as they come because they have the financial muscle for that,” said a senior mining executive in South Africa.

BHP itself said that although it believes that a combination with Anglo American would have had strong strategic merits and created significant value for all stakeholders, the company is also “confident in the highly compelling potential of its own organic growth” strategy.

Anglo American and BHP have been doubling down attention and investment on copper. This comes at a time there is deepened merger and acquisition activity in the South African and global copper mining space.

BHP lifted up copper production for the half-year to December by 10% to 987 000 tons while it was planning to top 1.8 million tons for its 2025 full year.

Anglo American’s South African shareholders are set to receive a special dividend of R73 per share in addition to other economic benefits after the global miner agreed to a tie-up creating a merged entity with Canadian mining group, Teck Resources.

With its share price on the JSE appreciating by 11% to R614.86 year to date, Anglo American is holding its line as it believes it has a higher valuation.

“Anglo held its line. Since the last round of talks, its share price has run well ahead of BHP’s, widening the valuation gap and making any new approach harder to justify,” said natural resource expert, Zack Hartwanger, on Monday.

BHP shares on the JSE have been weaker by just below 1% in the year-to-date. Both groups traded in the red in the afternoon on the JSE on Monday.

John Meyer, an analyst with SP Angel, said the 2024 rejected approach for a merger from BHP, Anglo American “has progressed plans to simplify” its operations.

This follows the demerging of the South African platinum operations now operating as Valterra Platinum, the disposal of nickel operations and some of its coal businesses, as well as plans to divest the De Beers diamond business.

The planned tie up between Anglo American and Teck Resources will merge the two companies in a transaction which would create a mega copper producer by 2027 through bringing the Chilean mines at Collahuasi and Los Bronces, the Peruvian Quellaveco and Antamina mines and Teck’s Highland Valley operation in British Columbia together.

Anglo American has also announced plans to collaborate with Chile’s State-owned copper producer, Codelco, on the joint development of the adjacent Los Bronces and Andina copper mines.

Other mining experts said Anglo American had rejected the latest offer by BHP as the valuation gap is still wide, with strategic control of the London-listed company fiercely guarded and protected.

“As M&A pressure mounts across the resource sector, this standoff could redefine deal-making power dynamics from London to Sydney,” said Ashwin Binwani, founder of private investment firm, Alpha Binwani Capital.

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