- BHP approached deemed “highly unattractive”
- Uncertainty and execution risks borne by Anglo shareholders
The board of Anglo American (AAL) has rejected the £31bn takeover approach by BHP (BHP), stating that it “significantly undervalues Anglo American and its future prospects”. A rejection on valuation grounds probably wouldn’t surprise many industry analysts given that the effective offer price of 2,508p a share is 40 per cent adrift of where Anglo’s share price was two years ago.
True, the deal touted by the Australian miner represented a marked premium over Anglo’s recent moving average share price, even when adjusted for the value of the Kumba Iron Ore and Anglo American Platinum (SA:AMS) subsidiaries, which would have been split from the portfolio before the deal was finalised. But it was pitched during a period of suppressed platinum pricing, as end-markets work their way through residual inventory. Earlier this year, AMS initiated a restructuring which could eventually affect more than 4,300 jobs.