BHP denied more time in $74 billion Anglo American merger talks threatening end to takeover pursuit

Anglo American has rejected BHP’s plea for more time to negotiate on a potential deal in what spells the likely end of a $74 billion, five-week pursuit from the Big Australian.

Anglo said its suitor had “not addressed the board’s fundamental concerns” linked to the complex structure and value of the deal and concluded there was “no basis for a further extension” as BHP had pushed for just hours earlier.

Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but last week agreed to a one-week extension to a UK deadline in order to extend talks.

The two miners had been at an impasse over the proposed structure of BHP’s deal, which requires Anglo to first spin off its holdings in two South African companies before a takeover.

Anglo maintained the plan created too much risk for its own investors, who will be left holding shares in the spinoffs.

The Big Australian had told the ASX and London Stock Exchange on Wednesday there had been “several engagements” with Anglo and its advisers since an extension was granted last week.

As part of the measures hoped to get a deal over the line, BHP said it would be willing to pay a “reverse break fee” if the transaction fails to get approval in South Africa, as well as maintain employment levels and other charitable commitments.

BHP had until 5pm in London — 2am in Sydney — on Wednesday to commit to an offer, after Anglo agreed to extend a previous cut-off to allow for discussions.

“BHP is confident that the measures it has proposed to the board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals,” the company told the market in the new update.

“BHP believes a further extension of the deadline is required to allow for further engagement on its proposal.”

BHP’s third all-share proposal valuing Anglo at roughly $74 billion was rebuffed by the target last Wednesday, but had opened talks between the companies’ boards, extending the deadline for a firm bid to May 29.

The decision likely means BHP will have to stay away for six months.

From the moment BHP’s takeover approach first became public, South Africa has loomed front and centre of a potential deal. It is home to some of Anglo’s biggest operations, employing tens of thousands of people, and the company has deep political and social ties to the country.

Several of Anglo’s biggest shareholders said last week they supported the company’s efforts to persuade BHP to change the structure of its takeover proposal or compensate for the risks it presented.

A tie-up between the two would have had far-reaching implications for the mining industry. BHP is already the sector’s most powerful company, and a successful deal would leave it towering over its biggest rivals.

Earlier this month, Anglo rushed out a radical restructuring plan of its own.