Anglo American rejects BHP'S takeover proposal

Anglo American rejected rival miner BHP Group's 31.1 billion pound (US$39 billion) takeover proposal yesterday, saying the bid significantly undervalued the London-listed miner and its future prospects.

"The BHP proposal is opportunistic and fails to value Anglo American's prospects, while significantly diluting the relative value upside participation of Anglo American's shareholders relative to BHP'S shareholders," Anglo Chairman Stuart Chambers said in a statement.

Reuters reported on Thursday, citing two sources, that Anglo's management did not consider the proposal as attractive, as some investors and analysts dismissed it as opportunistic.

BHP, the world's largest listed mining company, on Thursday offered Anglo's shareholders 25.08 pounds per share, a premium of 31 per cent to the market close on Wednesday, sending the London-listed target's shares up 16 per cent.

A condition of its proposal is that Anglo first distributes to shareholders its stakes in Anglo American Platinum and Kumba Iron Ore, both of which operate in South Africa where BHP has no assets.

Anglo on Friday said the structure on offer was "highly unattractive...given the uncertainty and complexity inherent in the Proposal, and significant execution risks."

BHP had no immediate comment on Anglo's rejection. Anglo shares were down 0.6 per cent in early trading.

BHP'S shares closed 4.6 per cent lower in Australia. The company's Australian stock did not trade on Thursday as the country's share market was closed for a holiday.

"With regards to a price, I think it's pretty clear that the initial shot fired is just that. It’s just the first shot - it's not their best and final," said Todd Warren, a portfolio manager at Tribeca Investment Partners in Sydney, which holds shares in Anglo.

"We would need to see more money on the table before we sold our shares," he said.

Questions about jurisdictional risks in South Africa and other regions, and concerns that Anglo American's businesses are lower margin than BHP'S led to a share sell off, said RBC Capital Markets analyst Kaan Peker in Sydney.