Anglo to exit diamonds and platinum in bid to fend off BHP takeover

Anglo American plans to exit diamond, platinum, and coal mining in one of the biggest shake-ups in the company’s 107-year history, as the miner fields a takeover approach from its bigger rival BHP.

Anglo said Tuesday that it plans to demerge or sell its De Beers diamond business, separate its Anglo American Platinum unit and sell its coking coal mines in Australia. It will also slow spending on a giant fertiliser mine in England.

While Anglo has been working on a turnaround plan since the middle of last year, it’s been forced to accelerate the process after BHP proposed a takeover last month.

So far Anglo has rejected two proposals from BHP - the latest worth $A64.4b - saying they undervalue the company and the structure is unworkable.

Anglo is pinning its hopes on investors supporting its plan - and backing management to deliver it - rather then pushing to accept an offer BHP. Investors had been demanding Anglo come out with its own plan.

On Monday night Anglo American rejected a scrip deal valuing it at £27.53 a share, an increase of about $4.8b from BHP’s £25.08 a share proposal last month.

Anglo shareholders have already been demanding the company accelerate a turnaround plan that it’s been working on since the middle of last year. Rejecting BHP’s latest overture added more pressure on Anglo to explain how it would create more value than by just selling to the rival.

BHP will have to return with an improved offer, and possibly a new structure, if it wants to get a deal done.

Bloomberg.