The mining company Anglo American has rebuffed a takeover proposal from its larger rival BHP Group, declaring that the £31.1bn offer is “opportunistic” and “significantly” too low.
A day after the mining sector was shaken up by BHP’s approach, Anglo’s board has unanimously rejected the proposal.
The company said: "The board has considered the proposal with its advisers and concluded that the proposal significantly undervalues Anglo American and its future prospects."
It gives several reasons: not only is the offer too low but Anglo isn’t impressed by the structure of BHP’s all-share proposal, citing uncertainty and complexity, and “significant execution risks”.
Under BHP’s plan, Anglo would demerge its entire shareholdings in Anglo American Platinum Ltd and Kumba Iron Ore Ltd to its shareholders first, before being acquired, as BHP is mainly interested in its copper mines.
Announcing the rejection of BHP’s approach, Stuart Chambers, the chair of Anglo American, told the City: "Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends.
"With copper representing 30% of Anglo American’s total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the board believes that Anglo American’s shareholders stand to benefit from what we expect to be significant value appreciation as the full impact of those trends materialises."
Chambers adds that Anglo American is “entirely focused” on achieving its strategic priorities.
The company owns mines in countries including Chile, South Africa, Brazil and Australia, but a series of missteps – including disappointing production rates last year – have left it vulnerable to a takeover approach.
But some analysts have already suggested that BHP might have to improve its offer, or that other bidders could also enter the fray with their own proposals.
Yesterday, Anglo’s shares soared 16% and closed slightly higher than BHP’s offer (which is worth £25.08 a share). That implies that the City expected the initial proposal to be rebuffed.
The agenda • 9.30am BST: UK insolvency statistics for March • 11.30am BST: Bank of Russia interest rate decision • 1.30pm BST: PCE measure of US inflation index for March • 3pm BST: University of Michigan index of US consumer confidence
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BHP’s takeover bid for Anglo American is clever but far too low 
