BHP pulls out of Anglo American mining mega-merger

Mining giant BHP has pulled out of its planned takeover of rival Anglo-American in a deal that would have been valued at £38.6bn.

BHP had been particularly attracted to Anglo’s copper assets, with the metal rising in value because of its role in the green energy transition.

The collapse of the deal follows a month of wrangling between the pair, culminating in a frantic back and forth on Wednesday.

Anglo rejected BHP's calls to extend talks on Wednesday morning, while BHP said it was denied access to "key information" from Anglo during the negotiations "despite numerous requests".

BHP's chief executive Mike Henry said it was "unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost".

Meanwhile, Anglo American’s chairman Stuart Chambers insisted the company would be able to provide greater value for shareholders.

"Our shareholders will benefit from value transparency and undiluted exposure to a simpler portfolio of world class assets, consistently stronger operational performance, and highly attractive growth in copper, premium iron ore and crop nutrients."

Back and forth

On Wednesday morning, Australia's BHP attempted to ease concerns about its plans for Anglo American's business in South Africa - where Anglo has major operations - ahead of elections in the country.

BHP made commitments that included job security for employees there, but said it needed an extension on talks "to allow further engagement" on the plans, ahead of the 17:00 BST Wednesday deadline.

However, Anglo American rejected the extension plea, arguing that the deal terms were still not good enough.

The pair have been discussing the deal since Anglo American rejected BHP’s first takeover approach, a £31.1bn offer, at the end of April.

Anglo then rejected BHP’s second offer, of £34bn, at the start of May and its third offer of £38.6bn last week, but some Anglo shareholders urged the company to keep negotiating.

Anglo and the South African government have also cited concerns about BHP’s proposal to spin off the South African businesses.

After rejecting BHP the third time, Anglo announced its own plans to break up its business by selling or spinning off major parts of the firm including its De Beers diamond operation and its platinum division, with a view to focusing on key areas such as copper, premium iron ore and crop nutrients.

BHP had made a series of proposals it said it would keep for at least three years to ease Anglo’s concerns.

They included maintaining current staff levels at Anglo’s Johannesburg office, keeping BHP listed on the Johannesburg Stock Exchange, and sharing the cost of increased South African employee ownership "if required to secure regulatory approvals".

However, Anglo said that BHP’s offer still included "the same highly complex and unattractive structure as the proposals previously rejected on 26 April 2024 and 13 May 2024".

Speaking to the BBC's Today programme on Wednesday before Anglo’s update, Ben Davis, head of mining at analyst Liberium Capital, said there was "not really much meat on the bones" of BHP’s proposals.

He added that they amount to a continuation of its commitment to South Africa rather than an improvement.

He also expressed sadness about the prospect of another listed UK company being snapped up by an overseas business.

"To see [Anglo American] gone from the London Stock Exchange would certainly be a loss," he said.