BHP’s plan to take over rival could be a fresh blow to City
The Australian mining company BHP has set out plans for a £31bn takeover of its rival Anglo American, in a deal that threatens to hasten the exodus of Britain’s largest firms from the City of London.
The proposed takeover of London-listed Anglo would rank as one of the biggest deals in the global mining industry of the past decade and comes as miners race to corner the market for copper, which is in high demand from the clean energy sector.
However, within hours of the proposal emerging the deal had attracted criticism from some of Anglo American’s biggest investors including South Africa’s government, throwing up a potential obstacle to the BHP plans.
Gwede Mantashe, South Africa’s mining minister, told the Financial Times he was against the takeover plan because of the country’s previous experience with BHP was “not positive”, although he stressed this was not an official government position. South Africa’s Public Investment Corporation is Anglo American’s biggest shareholder and a significant number of its mines are located in the country.
Shareholders in London dismissed the offer as too low. Legal & General Investment Management, one of Anglo American’s 20 largest investors, described the approach as “highly opportunistic” and “unattractive” because it undervalues the long-term prospects for the company.
BHP moved its primary listing from London to Australia in 2022, and the takeover of Anglo American, should it proceed, would mean the UK market would lose one of its 25 largest companies. In another blow for the City, the consumer goods group Unilever indicated yesterday it was considering an Amsterdam listing for the demerger of its €17bn (£14.6bn) ice-cream business, which includes the Cornetto, Ben & Jerry’s and Magnum brands.
Hein Schumacher, Unilever’s chief executive, said he was “talking to many different stakeholders in the process” and had held discussions with the Dutch economic affairs minister. However, he did not confirm whether he met the equivalent UK minister, raising fears that London could miss out.
There has been much handwringing in the City and Whitehall over an exodus of listed firms. Those leaving include the travel group Tui, which will shift its listing to Germany, and the Dublin-based betting firm Flutter, which is asking shareholders to consider moving its shares to the US market. Shell has stoked speculation it could switch to New York and oil rival BP has been named as a potential takeover target.
Amid the growing concerns over City’s future as a major capital market, London Stock Exchange shareholders met yesterday to vote through a controversial plan to double the pay of its chief executive, David Schwimmer, to more than £13m a year. The resolution passed, with nearly 89% voting in favour of the new pay policy.
Schwimmer tried to appear upbeat, telling shareholders the pipeline of floats was “encouraging” and that a pending shake-up of listings rules, which include simplifying some requirements for companies, would be helpful.
“We are very pleased with the direction of travel for the London market,” he said.
However, Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said the BHP offer “will send a fresh chill through the City of London”.
Anglo American’s market value has plummeted in recent years, making the miner a “sitting duck” for a takeover bid from larger rivals, according to Dan Coatsworth, an investment analyst at AJ Bell.