BlackRock could emerge as kingmaker in BHP’s $74b acquisition of Anglo American as clock ticks

The world’s biggest asset manager reportedly prodded Anglo American to extend talks with BHP and potentially thrash out a takeover deal.

London-headquartered Anglo American was encouraged by key shareholders including BlackRock to continue engaging in discussions with BHP over its proposed $74 billion acquisition, according to the Financial Times.

BHP, which is the world’s largest publicly-listed miner, now has until Thursday morning to make a firm bid for Anglo American or it will be forced to walk away for at least six months under the UK’s takeover rules.

Anglo rebuffed a third BHP proposal on Wednesday but agreed to extend the regulatory deadline by a week.

BlackRock was among a handful of investors that encouraged meaningful negotiations with BHP, said the FT, which reported the news first.

Two other significant shareholders, Ninety One and Sanlam Investments, also backed the decision to extend talks, despite concerns about a deal structure that requires Anglo to spin off its stakes in its South African platinum and iron ore units.

US-based asset manager BlackRock owns a 9.6 per cent stake in Anglo, according to LSEG data, and is also a BHP shareholder.

BlackRock has $9.1 trillion worth of assets under management.

South Africa’s state-owned Public Investment Corporation, which is now Anglo’s second-largest shareholder with 7.4 per cent, issued a statement on Wednesday before the latest BHP and Anglo announcements, calling for “meaningful revision” to the takeover proposal at the time.

BHP is set to stand firm on the structure and value of its latest takeover proposal, focusing instead on allaying its target’s concerns around execution risks over the coming week.

The FT said that according to people familiar with BHP’s thinking, there was only scope for “smaller, creative structures to better share the risks”.

However, people close to Anglo cited by the newspaper said the structure needs altering or BHP must pay more.

BHP highlighted the increased exposure to copper — used in renewable batteries and semiconducting components that are essential for artificial intelligence technology — as its first bullet point when detailing the transaction’s benefit to shareholders.

Anglo has been seen as a potential target among mining majors thanks to its prized South American copper mines — in Chile and Peru — at a time when a large contingent at the top end of the market is looking to elevate their copper exposure.

BHP already has a substantial copper presence in Chile, including the huge Spence and Escondida mines.

However, Anglo’s attractiveness has been dulled by its complicated structure and exposure to a basket of other commodities that are broadly unappealing in the current environment, on top of deep links to South Africa.

Shares in London-listed Anglo fell to £26.28 following the latest bid, substantially below BHP’s £31.11 per share offer, suggesting shareholders don’t believe a BHP deal will materialise.

BHP’s third attempt at lassoing Anglo has overshot the mark by more than $5 billion, according to analysts at RBC Capital Markets. The broker says the latest offer is “well above” the top-range of what it views as being value accretive.

A successful takeover by BHP would represent the first mega deal among the world’s biggest diversified miners in more than a decade.

BHP and its biggest rivals spent years on the sidelines after a series of disastrous transactions, including the Big Australian’s ill-fated merger with the Anglo–Dutch miner Billiton in the early 2000s.