(Alliance News) - Anglo American PLC on Wednesday rejected a third takeover proposal from BHP Group Ltd but gave the Melbourne-based miner another seven days to formalise a bid.
Shares in Anglo American rose 0.2% to 2,693.00 pence in London on Wednesday. In Johannesburg, shares rose 1.4% to ZAR6,246.90.
Shares in BHP fell 3.7% to 2,341.00p in London. In Sydney, they closed up 0.4% at AUD46.24.
Under the terms of the latest proposal, submitted by BHP on Monday, Anglo American shareholders would receive 0.8860 BHP shares and shares in each of Anglo American Platinum Ltd and of Kumba Iron Ore Ltd for each share owned.
Anglo American said the latest proposal represents a total value of around 2,934 pence per share.
For its part, BHP said the offer was worth 3,111 pence per Anglo American share based on the closing share prices of BHP on Wednesday and Anglo Platinum and Kumba on Tuesday.
BHP said its "final offer ratio" could be increased under certain conditions such as Anglo’s board agreeing to recommend a higher bid or another bid from a rival company.
Anglo American said the proposal includes the same "highly complex structure" as the proposals previously rejected on April 26 and May 13.
"The board continues to believe that there are serious concerns with the structure given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American's shareholders," the company said.
The bid would require two contemporaneous demergers of publicly listed companies alongside a takeover which was unprecedented, Anglo American said.
Anglo American noted this was was in "clear contrast" to its "simpler standalone plan" to accelerate value delivery announced last Tuesday, and its proposal to demerge Anglo American Platinum Ltd - a single demerger that Anglo American has a "proven track record in delivering."
Anglo American said it was confident in its standalone future prospects and believes its strategy would "unlock significant and undiluted value" for shareholders.
As a result, Anglo American "unanimously rejected" the latest proposal.
Chair Stuart Chambers said the latest proposal did not address the concerns about "the structure, which results in significant complexity, execution risks, an extended timeline to completion and consequently has the potential for material value leakage to be disproportionately suffered by Anglo American's shareholders."
"Multiple engagements with the BHP team have not yet been able to resolve the concerns on these issues," he said.
Nonetheless, Anglo American requested an extension to the shut up, or put up deadline for BHP, to next Wednesday. This would allow "further engagement" with BHP, on the "mitigation of risks and value impact on Anglo American's shareholders that are inherent" in the latest proposal.
This has been granted by the Takeover Panel.
Chambers said the board is "willing to continue to engage with BHP."
BHP Chief Executive Mike Henry said the final offer was a "significant increase" from its first proposal and was "underpinned" by BHP's disciplined approach to mergers and acquisition.
"BHP's revised proposal will offer immediate value for Anglo American shareholders and allow them to benefit from the long-term value generation of the combined group," it said in a statement.
BHP said it "looks forward" to engaging with Anglo American to explore this "unique and compelling opportunity to bring together two highly complementary, world class businesses."
On Monday last week, BHP made a all-share offer which valued Anglo at GBP34 billion, up from GBP31.1 billion under its previous unsolicited, non-binding and conditional offer made last month. BHP offered 0.813 of a BHP share for each Anglo share, giving a current value to Anglo shares of 2,753 pence each, based on BHP's own price.
By Jeremy Cutler, Alliance News reporter
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