Australian executives from BHP have flown into South Africa to assure investors that they had good intentions as the company pursues its $39 billion (R741bn) bid for the Johannesburg and London listed Anglo American, following a strong rebuff of the offer by labour unions, government officials and other key stakeholders.
AUSTRALIAN executives from BHP have flown into South Africa to assure investors that they had good intentions as the company pursues its $39 billion (R741bn) bid for the Johannesburg and London listed Anglo American, following a strong rebuff of the offer by labour unions, government officials and other key stakeholders.
The board of Anglo American rejected the bid by BHP a fortnight ago, saying it undervalued the company, but also opposed to the pre-condition that requires that Anglo American Platinum (Amplats) and Kumba Iron Ore to be spun off.
In the past week, BHP said it would remain listed in South Africa and also highlighted that Kumba and Amplats will retain their JSE listings under the proposed acquisition.
“The high-powered delegation from BPH held a series of meeting in South Africa, mainly to reassure everyone that the company has good intentions as it pursues the acquisition of Anglo,” said a mining industry source.
“They want to be in control of the perceptions that had started to go sideways and creating sideshows after negative comments from the government and from the labour sector.”
The BHP delegation that flew to South Africa at the end of last week included CEO Mike Henry.
During the brief stay in Johannesburg, Henry and his team reportedly met the Mineral Resources and Energy Minister Gwede Mantashe, investment advisers, some shareholders in Anglo American, and executives from some fund management companies.
Last week, BHP rebuffed sentiment that conditions to its bid were a no-confidence vote in South Africa as it sought to exclude the South African-focused units of Anglo American.
The Australian resources giant has until May 22 to make a firm offer for Anglo American under regulatory rules.
But it is the visit to South Africa that has shown the company’s strong pursuit and belief that Anglo’s copper operations will add clout to its production capacity and “profile as a future-proofed metals” miner.
“Henry is very serious about the acquisition but he does not want to show that he is being desperate and aggressive,” explained another source who was privy to the developments.
“So he is taking things in a more modest manner. That’s why he came to South Africa, basically to plug the holes that were emerging in the narrative and to get the buy-in of key stakeholder.”
Shares in BHP traded 0.28% stronger at R521.30 on the JSE on Friday, while Anglo American was also firmer by 0.93% at R621.84 per share.
After the rejection by Anglo American’s board, analysts were of the view that BHP could “potentially restructure” its offer to accommodate the concerns of key South African stakeholders and regulators.
This comes as there are likely to be rival offers from Glencore, Rio Tinto and other large resource companies, as well as from some sovereign wealth funds.
“In our view, the new offer could reach the equivalent of GBP 29/sh to reflect Anglo American’s value. This satisfies AAL shareholders, and at the same time is good for Amplats and Kumba shareholders,” said Bob Brackett, analyst at Bernstein Societe Generale.
“BHP shareholders would also benefit by getting 40% attributable copper production growth which offers long-term value and potential re-rating due to higher composition of copper in the portfolio.”
– BUSINESS REPORT
