Anglo American’s South Africa investors open to improved BHP bid

According to a report from the Financial Times, key South African shareholders of Anglo American are receptive to a potential takeover bid from BHP, the world’s largest listed mining group. Some of these shareholders are suggesting that BHP enhance its offer by including a cash component. They indicated to the FT that they are not fundamentally opposed to a takeover by the Australian company.

The FT’s report, based on input from fund managers holding minority stakes in Anglo, suggests that a simpler and more lucrative bid from BHP, possibly incorporating cash or removing the condition of divesting Anglo’s South African assets, would be viewed positively and could potentially be accepted.

The complexity of the deal structure has led some local fund managers to argue that a higher premium is warranted compared to a straightforward acquisition. FT highlighted this aspect in its report.

Anglo American recently rejected BHP’s scrip takeover proposal worth $39 billion, stating that it significantly undervalues the company and its future prospects. BHP’s proposal involves Anglo spinning off its controlling interests in local mining entities Anglo American Platinum (Amplats) and Kumba Iron Ore, which collectively hold a value of around $13 billion.

The proposal faces challenges due to its complexity and the political sensitivity surrounding it, along with potential economic implications for South Africa, where Anglo is a major employer. The South African government is closely examining the proposed deal, with Mining Minister Gwede Mantashe expressing caution based on the country’s prior experiences with BHP.

Anglo American declined to provide comment on the matter, and BHP has not yet responded to a Reuters request for comment.

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