Mining "Century Deal" falls through! BHP Group abandons $50 billion acquisition of Anglo American Resources

Global mining "century deal" has really fallen through, as BHP Group Limited has abandoned its efforts to create a mining giant through acquisition.

On Wednesday, May 29th, Eastern Time, BHP announced that it has no intention to make a formal acquisition offer to peer company Anglo American. BHP's CEO Mike Henry stated in the announcement on that day:

"We believe that our acquisition proposal to Anglo American is an excellent opportunity to effectively increase value for both sets of shareholders, but we are unable to reach an agreement with Anglo American on specific views regarding regulatory risks and costs in South Africa. Despite seeking to engage constructively and making numerous requests, we have been unable to obtain key information from Anglo American to address their concerns about perceived excessive risks."

Henry mentioned that BHP still believes that its acquisition proposal is the most effective structure to bring value to Anglo American shareholders, and is confident that if they were to collaborate with Anglo American, the acquisition transaction could potentially receive approval from all regulatory authorities, including those in South Africa.

The above statement indicates that BHP's nearly $50 billion acquisition plan has officially fallen through. According to the latest proposal announced by BHP last week, if the acquisition were to be agreed upon, Anglo American shareholders would receive 0.8860 BHP shares for each ordinary share of Anglo American. Media estimates suggest that BHP's offer is equivalent to a transaction value of £38.6 billion, approximately $49.2 billion, making it the largest mining transaction globally, resulting in the creation of the world's top copper mining company, with a supply volume accounting for 10% of global total supply.

BHP's statement came after being rejected by Anglo American once again. According to UK regulations regarding acquiring companies, BHP's acquisition offer to Anglo American is set to expire at 5 pm London time on Wednesday. BHP had hoped for Anglo American to further extend the already one-week extended offer period, stating that they had proposed a series of "socio-economic measures" to address Anglo American's concerns about their acquisition proposal, but more time was needed for discussion.

Anglo American responded by stating that they still have concerns about BHP's all-stock transaction proposal, with their board unanimously believing that there is "no reason to further extend" the consideration period.

The measures mentioned by BHP on Wednesday to address Anglo American's concerns include both companies continuing to be listed in South Africa and being led by local management teams. Anglo American, on the other hand, still favors the prospects of remaining an independent company, believing that BHP's latest proposal is as complex and unattractive as the proposals rejected by Anglo American last month and earlier this month.

When rejecting BHP's £31.1 billion acquisition proposal at the end of last month, Anglo American stated that the proposal "seriously undervalued" the company and its future prospects. Wall Street Journal mentioned at that time that BHP's acquisition may have been attracted to Anglo American's copper mining resources, as the latter has large copper mining operations in South America, and copper is an important metal for energy transition, with most mining companies currently looking to expand in this area. With the growth in electrification demand and expectations of future supply shortages, copper prices have been steadily rising Earlier this month, BHP Group Limited made its second offer, proposing a £34 billion acquisition deal, which was increased to £38.6 billion last week. Anglo American rejected the offer for the third time last week but agreed to extend the negotiation period. At that time, it was reported by the media that the valuation gap between the two parties was narrowing, with the main difficulty lying in the complexity of divesting Anglo American's South African business. Several Wall Street institutions believe that the deal is likely to be reached, but BHP Group Limited and Anglo American may need to make employment or other commitments in South Africa to alleviate the concerns of the local government.

On Wednesday this week, some media outlets mentioned that both Anglo American and the South African government have expressed concerns about BHP Group Limited's proposal to divest its South African business. Stuart Chambers, the chairman of Anglo American, has stated that BHP Group Limited's request to split the two Anglo American entities in South Africa brings significant uncertainty and management risks. Mining analysts have told the media that BHP Group Limited's proposal "does not have much substance," as these proposals are just a continuation of their previous commitments in South Africa rather than improvements.

BHP Group Limited has previously placed importance on copper mining. It has been pointed out by the media that apart from acquiring Anglo American, there are few other acquisition deals that could rapidly increase BHP Group Limited's influence in the energy transition's most critical metal, copper. While BHP Group Limited has stated that it does not rely on mergers and acquisitions, the company has a large amount of copper reserves available for development. However, the management also acknowledges that copper resources are becoming increasingly difficult to explore.

After rejecting BHP Group Limited's offer for the third time, Anglo American announced its own plan to sell or divest businesses including the De Beers diamond business and platinum business, focusing instead on copper, high-quality iron ore, crop nutrients, and other important areas. This Wednesday, Anglo American stated that it plans to proceed with this plan