BHP boss Mike Henry fires a parting shot at Anglo American after abandoning $74 billion bid

BHP’s chief executive Mike Henry has implied Anglo American was never really serious about doing a deal.

The Big Australian has decided against making a firm offer for London-headquartered Anglo American, instead walking away for now from what would have been the biggest mining tie-up in more than a decade.

The announcement — less than one hour before a 5pm Wednesday UK deadline — marked an abrupt end to the five-week public pursuit, involving three takeover proposals, between two of the industry’s biggest names.

In a statement to the ASX Mr Henry said BHP maintained its latest $74 billion bid for Anglo was a “compelling opportunity” to “effectively grow the pie of value” for both sets of shareholders.

But the takeover target, he claims, was not willing to come to the table to iron out the details.

“We were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost,” he said.

“Despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.

“We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.”

From the get-go the two miners had locked horns over the proposed structure of BHP’s all-scrip deal, which requires Anglo to first spin off its holdings in two South African companies before a takeover proceeds.

Anglo was concerned that BHP’s demand it first exit Anglo American Platinum and Kumba Iron Ore could leave the newly independent Johannesburg-listed companies to carry the cost of any concessions imposed by South Africa, reducing their value and ultimately penalising the current Anglo investors who would receive the shares in the spinoffs.

The multistep process would require several layers of approval in South Africa, where deals are subjected to “public interest” assessment and authorities have a record of extracting substantial concessions from companies.

BHP had already made some of its own concessions, expressing an openness to pay Anglo a fee if the demerger couldn’t make it past the South African regulatory hurdles.

But now that Anglo has rejected BHP’s plea for more time to negotiate on a potential deal the would-be acquirer is effectively barred from having another crack for at least six months, unless a rival suitor emerges.

The pressure is now on Anglo chief executive Duncan Wanblad to deliver on an ambitious turnaround plan, while his counterpart at BHP may have to look elsewhere for the copper growth that fuelled its desire for Anglo.

After BHP made its initial move Mr Wanblad sped up a strategic review process and subsequently told investors Anglo would strip down its portfolio to copper, South African iron ore and potash.

He put an ambitious 18-month deadline on selling the remainder of its asset base, which encompasses a broad basket of commodities including nickel, diamonds, platinum and metallurgical coal.

Two of Anglo’s metallurgical coal mines in Queensland are virtually next door to BHP operations. This could set the stage for another — albeit smaller-scale — Anglo-BHP deal battle.

London-listed Anglo’s shares fell 3.1 per cent on Wednesday but remain well above the levels seen before Bloomberg first reported the takeover interest. Prices for key commodities including copper and iron ore have rallied over the same period.

Some BHP shareholders were anxious about the Anglo deal given the Big Australian’s ill-fated takeover of Billiton in the early 2000s.

with Bloomberg