Anglo American Rejects BHP Billiton Bid: What Happens Next?

Was Anglo right to reject this offer? I it was certainly expected by most of us that they would. I mean the premium that was kind of implied by the offer was only about 1314% on the close. You know for a company that’s been around for 100 years and we’re trading above that offer just as recently as last year, it feels like a local bid on top of the fact and kind of what they’ve highlighted in their statement that you know this structure was very unattractive. I mean they were asked to spin out Kumba and the Anglo Platinum stake holdings to their shareholders which would have created a huge amount of flow back uncertainty. We saw it with Tungela a couple of years ago. That whole register nearly flipped within 10 days. So to try and you know accommodate that would be incredibly difficult. What, what is the BHP rationale for pushing for that restructuring that as you say has all those complex? Yeah, it’s a, it feels, I mean part of it is probably a size issue. So it would be an easier business to absorb. But clearly it sends the signal that they’re not interested in South African assets. They’ve already made that clear when they spun out their other South African assets with the S 32 vehicle. So I can see why the South African government might be a little sensitive than doing it second time around. What would be do you have a view on what an attractive premium or an appropriate or a fair premium would be for this business? It would have to be, it would be. I mean for us we’re looking for at least 30% to the close I think to for for for that to be considered by the board. But even then it’s it is challenging. I mean the the reason why Anglo flags this is being so opportunistic is that they have massively underperformed the rest of the sector over the past 1824 months or so. So you know this is ever since they’ve had they’ve had like all mining companies have had a bad run of operational mishaps some of them their own fault some of them infrastructure related in terms of what’s actually happening in South Africa. So to yeah for BHP to covered now is always going to seem like a a bit of a yeah timing work a lot of speculation that won’t just be PHP making making a bid for this for this company who who would top the list of other of other potential contenders. How much appetite is there within the mining sector for for this business. So compared to where we were in 2012 where people were just trying to buy anything and everything, it’s got a lot calmer. We saw Glencore Tech last year. They probably got their hands full with that as that goes through the through the regulators. So it’s not a long list of people probably Freeport and Rio Tinto are the top two names but Rio Tinto in my mind is probably the one that is most willing to do the deal. They’ve said themselves or certainly in recent commentary that their builders, not buyers, particularly when it comes to things like Lithium. But at the end of the day, Anglo American is one of the very few assets or companies around which is somewhat in play that could be acquired. And if BHPI don’t, I don’t think this, their current bid obviously has not been successful, but if they come back with a bit more, they’re not going to just let BHP get their hands on it. So I expect their tune will change quite rapidly over the next couple of weeks. OK. So we watch for that from from Rio Tinto. How, how do you see this? I mean you touched, you touched on it, you nod to it. How do you see this Ben, unfolding in in the weeks and months, months ahead? I don’t it’s not going to get out of control. I don’t see you know we’re not expecting big cash bids or you know real kind of the where we were back in the Super cycle day kind of charge days. But at the same time you know that those copper assets are very much in you know there, there is a very minority of them. So yeah, you expect the the bid premium to climb from here for sure. What would a tie up between BHP and it’s a big wood, there’s a big question mark clearly still over this. Yeah. What would a tie up between BHP and Anglo mean for the broader copper sector? Yeah, it’s, it’s one for, you know the what the regulators would be considering. I mean it would make BHP the clear biggest cop provider in the world. They’re already actually overtaking Cadelco because of Cadelco poor performance. But yeah, they’re going to be considerable in size now. Would this be an issue from a competition perspective which some people have flagged? I don’t think so. From a concentration perspective they would have no market impact and the idea that they would try and influence prices by pulling back production is somewhat farcical. But the Chinese might try and stick their or in that they did with Glencore and extra to with the tie up there. They don’t have real teeth, but obviously they buy most of the world’s commodities so that they have some part to play.