The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.

Less Ads, More Data, More Tools Register for FREE

TOP NEWS: Anglo American unveils most "radical" strategy in decades

Tue, 14th May 2024 09:02

(Alliance News) - Anglo American PLC on Tuesday unveiled a new "radical" strategy that will see it keep copper and iron ore assets, while getting rid of platinum and diamond businesses.

The move, which follows a "comprehensive asset review", comes a day after the London-based mining company rebuffed a sweetened offer from BHP Group Ltd, its major peer.

The new all-share offer from Melbourne-based BHP valued Anglo at GBP34 billion, up from GBP31.1 billion under its previous offer. BHP is offering 0.813 of a BHP share for each Anglo share, giving a current value to Anglo shares of GBP27.53 each, based on BHP's own price.

As part of the proposed deal, BHP wants Anglo American to split off Anglo American Platinum Ltd and Kumba Iron Ore Ltd in South Africa.

On Monday, BHP confirmed it had made an improved offer to buy Anglo American last week, but said the offer was rejected by the Anglo board on Monday.

To unlock shareholder value and to simplify its portfolio, Anglo American said on Tuesday said it intends to "demerge" Anglo American Platinum Ltd and also "divest" or "demerge" De Beers as part of its new strategy.

The diversified miner also wants to divest its steelmaking coal business, saying it is already responding to "strong" buyer interest. It is also exploring options for care and maintenance and divestment of its nickel operations.

In what it called "the most radical changes" in decades, Anglo said it has decided to focus on copper and iron ore, while retaining its crop nutrients "optionality" at Woodsmith.

"We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," Chief Executive Officer Duncan Wanblad said in a statement.

"Anglo American's shareholders will see the full undiluted upside from these extensive changes, with the value of our copper and iron ore assets brought to the fore," Wanblad said.

"This next step in the transformation of Anglo American's portfolio is set to accelerate the recognition of value that has been inherent in our business for many years and provide Anglo American's shareholders with undiluted and differentiated participation in the major structural demand trends, while minimising any frictional costs associated with this major portfolio transformation," he said.

Anglo American also said on Tuesday it is on track to achieve the previously announced run rate of USD1 billion annual savings in operating expenditure in 2024. Additionally, a further USD800 million of cost out from the end of 2025 is targeted.

Anglo shares were down 0.9% at 2,681.00 pence each in London on Tuesday morning. They were down 1.6% to ZAR624.67 in Johannesburg.

BHP has its primary listing in Sydney, where its stock ended 0.2% lower at AUD43.15 on Tuesday. In London, its shares were quoted at 2,316.30p, up 1.5%. They rose 1.8% to ZAR537.45.

By Artwell Dlamini, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

Related Shares

More News
Today 19:21

BHP and Anglo dig in even as takeover talks deadline nears, sources say

Deadline nears for BHP to make binding Anglo American offer *

Today 19:14

BHP and Anglo dig in even as takeover talks deadline nears, sources say,

Deadline nears for BHP to make binding Anglo American offer *

25 May 2024 18:05

BlackRock encouraged Anglo to extend talks with BHP, source says

May 25 (Reuters) - Anglo American was encouraged by key shareholders including BlackRock to continue engaging in talks with BHP Group over its propo...

25 May 2024 12:12

BlackRock pushed Anglo to extend talks with BHP, FT reports

May 25 (Reuters) - Anglo American was pressed by key shareholders including BlackRock to extend talks with BHP Group over its proposed 38.6 billion ...

23 May 2024 10:39

Diamond sales lose shine at De Beers

(Sharecast News) - Rough diamond sales at De Beers fell in recent weeks, Anglo American said on Thursday, on the back of subdued demand.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.