Anglo American has rejected BHP’s unsolicited offer just a day after announcing it has received interest from the world’s largest mining company.
The company said in a statement that BHP’s bid ‘significantly undervalues Anglo American and its future prospects’.
Anglo American shares were down, but only marginally. This suggests the market thinks BHP will be back with a better offer before long.
“It’s no surprise that Anglo American has rejected BHP’s takeover bid. Anglo American has long seen itself as one of the big players in the market and it certainly won’t let a rival swoop on the business when its chips are down,” said Russ Mould, investment director at AJ Bell.
“Miners have a habit of going through bad patches as they are juggling so many different risks and selling prices are, on the whole, out of their control due to the nature of the commodities market. Anglo American has certainly had its fair share of operational setbacks and negative readjustments to output guidance in recent times, but it will fight tooth and nail to stop any takeover attempts while it tries to get back on top.”
Mould continued to explain Anglo’s rejection of BHP bid follows a well trodden path in mining M&A which could see other players start a bidding war.
“The usual playbook for mega deals in the resources space is for the original suitor to respond to rejection by coming back with a better offer, or someone else throwing their hat into the ring. That contender could be Rio Tinto as it will certainly be watching activities with keen interest given it can see the same opportunity as BHP.”
