BHP Scraps Anglo Takeover Attempt (Again) – UBS Raises Question: What’s Next?

The world’s largest global diversified miner, BHP Group, has abandoned a renewed takeover approach for Anglo American, ending a brief effort to disrupt Anglo’s planned $60-billion merger with Canada’s Teck Resources.

BHP confirmed earlier that it had held preliminary discussions with Anglo, but said it was now “no longer considering a combination of the two companies” and would focus on its existing portfolio, according to a Bloomberg report. 

On Sunday, the outlet reported:

The regulatory statement followed a Bloomberg News report on Sunday that BHP — which had already failed in a bid for Anglo last year — made a new overture in recent days. Anglo rejected that new approach, according to people familiar with the situation, having reviewed the proposal and decided that it was not superior to the combination with Teck. The people asked not to be named as the discussions were private.

BHP’s renewed interest in Anglo highlights mining-sector activity centered on copper, where supply is tightening and demand is set to surge amid global electrification and artificial intelligence trends. 

The timing is notable: the takeover approach occurred just weeks before Anglo and Teck shareholders are set to vote on their $60-billion copper merger. 

UBS Analyst Myles Allsop told clients earlier that BHP had exhibited discipline by walking away from Anglo for the second time after a cash and stock approach was rejected, even though “it would create significant value for all stakeholders.” 

“BHP now can’t re-bid for 6 months, by which point the Anglo-Teck merger will likely be done,” UBS analyst Dominic Ellis noted, adding that “UBS Research still sees compelling upside for Anglo-Teck, and thinks it could trade at £33-49 per share on a copper price of $5-6/lb and an EV/EBITDAQ multiple of 8-9.5x, in line with copper pure plays.” 

Ellis asked: “The key question from here will be whether BHP is now firmly focused on the organic opportunity, or whether it will be looking at Anglo alternatives.”