BHP share price on watch after Anglo American takeover update

BHP is seeking an extension to its deadline to get a deal over the line.

| More on:
Three miners stand together at a mine site studying documents with equipment in the background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The BHP Group Ltd (ASX: BHP) share price will be one to watch on Thursday.

That's because the mining giant has just released an update on its proposed takeover of copper giant Anglo American plc (LSE: AAL).

What's the latest?

BHP notes that on 22 May the Board of Anglo American granted an extension to the deadline for BHP to make a takeover offer.

The Big Australian welcomed the extension as it provided it with the opportunity to engage with Anglo American about its concerns regarding BHP's proposal. That proposal would see BHP acquire the miner for approximately $75 billion.

According to the release, since the extension to the deadline was granted, BHP has continued to work extensively to address those matters. This has included several engagements with Anglo American and its advisers.

BHP is 'confident'

This afternoon, BHP has released an update on its discussions with the Anglo American team and revealed that it is confident it can resolve matters. It said:

BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals. BHP has considered market precedent transactions and believes that the risks are quantifiable and manageable. BHP has already factored the costs associated with these risks into the offer ratio of its proposal.

In addition, BHP has advised that it would be willing to discuss an appropriate reverse break fee. This would be payable by BHP on failure to achieve the necessary anti-trust and regulatory approvals, including in South Africa.

Deadline extension requested

BHP has requested that Anglo American extend the deadline again. It said:

BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination. BHP believes a further extension of the Deadline is required to allow for further engagement on its proposal.

Extension request rejected

Unfortunately for BHP, it has not done enough to sway the Anglo American board and its request for an extension has been rejected. Anglo American told the London Stock Exchange:

In aggregate, BHP has not addressed the Board's fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American's shareholders. Also taking into consideration detailed feedback from the Board's extensive engagement with Anglo American's shareholders and stakeholders, the Board has therefore unanimously concluded that there is no basis for a further extension to the PUSU deadline.

Editors note: article updated at 7:25pm

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A happy construction worker or miner holds a fistful of Australian dollar notes.
Materials Shares

$5,000 invested in BHP shares 5 years ago is now worth…

Will its shareholders be happy with their investment? Let's find out.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Materials Shares

Guess which ASX 200 stock is ending the week with a bang thanks to Rio Tinto

This stock has won a major contract from the mining giant.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Materials Shares

Is it time to buy ASX lithium shares?

Lithium prices continue to sink. Has this created a buying opportunity?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Materials Shares

Mineral Resources shares sink on Onslow Iron blow

This miner is having a tough session. Let's find out why.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

MAC Copper shares in trading halt as miner flags 'potential control transaction'

MAC Copper shares are frozen while Sandfire Resources shares are the fastest risers of the ASX 200 today.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Materials Shares

Bell Potter says this ASX lithium stock could rise ~50%

The broker has just put a buy rating on this lithium stock.

Read more »

A woman stands next to a large green battery smiling and eating an apple with a lifting green arrow line in the background, indicating rising stock prices.
Share Market News

Are Liontown Resources shares a buy, hold or sell according to Macquarie?

Here’s what the broker has to say about this Lithium miner. 

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Rio Tinto share price tumbles on CEO bombshell news

The mining giant is now looking for a new leader.

Read more »