Fight at Anglo American for independence

ANGLO American will set out its case for remaining an independent company at its annual meeting on Tuesday, after it rejected a $39billion (£31billion) takeover offer from rival BHP.

The AGM will be the first opportunity for Anglo to speak to shareholders since it rejected the “opportunistic” all-share bid from BHP on Friday. Aside from saying the offer undervalues Anglo and its prospects, chairman Stuart Chambers will state that the deal is too complex and risky to agree to.

Market experts believe that other major mining groups like Rio Tinto or Glencore could be tempted to put in competing offers for Anglo, but the copper to platinum to diamonds giant is expected to set out defences against any potential takeovers on Tuesday.

In particular,anglo is likely to say that the steps it is taking to improve its operations and grow the business will generate more value for shareholders than a sale of the business.

Russ Mould, AJ Bell investment director, said Anglo rejecting BHP’S offer was no surprise as it “has long seen itself as one of the big players in the market”, so will look to fight off any attempts to acquire it.

“Anglo American has had its share of operational setbacks and negative readjustments to output guidance in recent times, but it will fight tooth and nail to stop takeover attempts while it tries to get back on top,” he said.

Under City takeover rules, BHP has until May 22 to either table a concrete bid for Anglo or walk away for six months. However, market observers believe that BHP will be back shortly with a revised offer.

Trade Nation senior market analyst David Morrison said investors will be “relishing the prospect of protracted M&A (mergers and acquisitions) action” around Anglo, while Sophie Lund-yates, lead equity analyst at Hargreaves Lansdown, said “there’s every chance BHP will come back to the table”.

There are fears in the City that if Anglo succumbs to a bid from Australian giant BHP – the biggest mining group in the world – it could lead to other big companies leaving the London Stock Exchange.

Over the past few years, London has struggled to attract fresh flotations, most notably being snubbed by British microchip designer Arm, which opted to list on the Nasdaq in New York instead of London, while at the same time, its pool of companies has shrunk due to private equity buyouts, foreign takeovers, and to defections to other exchanges.