14 May 2024
If you are covering the announcement of Anglo American’s strategic review, please find below a comment from Jamie Maddock, energy and mining analyst at Quilter Cheviot:
“Anglo American has announced a wholesale change of its existing structure that entails the disposal of everything except copper, iron ore and crip nutrients. Those assets that would be put up for sale will most certainly appeal to competitors some in aggregate (perhaps forcing an offer for the group, like BHP is attempting, before it breaks itself up) and some in part.
“Anglo American has cleverly used its disclosure as a defence against BHP’s bid, bringing forward the result of its strategic review to today. While the changes are certainly radical, most of these were rumoured or hoped for before today’s disclosure and therefore the proposed changes are largely in-line with expectations. It will be the outlined timeline and related uncertainties to delivery that will be the determining factor.
“So, what happens next in this game of cat and mouse between Anglo American and BHP? Given the appeal of the steelmaking coal and nickel assets to others, a piecemeal disposal would increase competition and reduce the likelihood of an acquirer’s success given there more manageable acquisition size. Therefore, another global diversified miner who would find the nickel and coal assets appealing could be forced to make an offer or potentially lose out on the opportunity to bulk up in those areas. However, BHP’s offer is neither full or final (formal offer has to be made by May 22) and therefore another increased and/or reframed offer is more than likely to be forthcoming.
“Whatever happens, Anglo American is clearly an undervalued stock. Today’s announcement is just the next step in unlocking some of the clear value within Anglo American. Whether BHP can come up with the offer required to take the lot, now very much remains to be seen.”
