30 May 2024
If you are covering news around Anglo American and the failed bid from BHP, please find below a comment from Jamie Maddock, energy and mining analyst at Quilter Cheviot, on what it now means for Anglo:
“As BHP’s takeover of Anglo-American falls apart at the last hurdle, the hard yards now begin for Anglo with it attempting to unlock value from the sum of its parts. Clearly, differences in opinion of the extent of the value leakage to be borne by Anglo shareholders was insurmountable in negotiations with BHP, and this will ultimately result in Anglo beginning the tortuous process of breaking itself up. While undoubtedly a bumpy and potentially protracted process it should result in greater value realisation than the proposed BHP offer implied.
“Everything except iron ore, copper and crop nutrients will be on the table for either a sale or being spun off via an IPO. To put it into context, just under half of the estimated fair value of Anglo’s business will be disposed of over the next 18-24 months. BHP’s bid has put Anglo’s assets under the spotlight and thus interest will likely be high, and good value should be able to be achieved. Anglo’s high-quality asset base consisting of future facing and energy transition metals and minerals makes it highly attractive and differentiated versus peers.
“However, there are many risks involved in this break up. That said, there remains the backstop of an activist investor who will have some sway in the direction of things. Meanwhile, should the break-up be slow to begin or progress, there remains the looming threat of a potential offer from BHP and/or another interested party. The vultures will continue to circle on Anglo just in case management make some kind of misstep. However, given the quality of assets on offer, we are hopeful this won’t be the case.”
