BHP
Group
(BHP)
on
Monday
confirmed
that
made
an
improved
offer
to
buy
British
mining
peer
Anglo
American
(AAL)
last
week,
but
said
the
offer
was
rejected
by
the
Anglo
board
on
Monday.
The
new
all-share
offer
from
Melbourne-based
BHP
values
London-based
Anglo
at
£34
billion,
up
from
£31.1
billion
under
its
previous
offer.
BHP
is
offering
0.813
of
a
BHP
share
for
each
Anglo
share,
giving
a
current
value
to
Anglo
shares
of
£27.53
each,
based
on
BHP’s
own
price.
Anglo
shares
were
down
0.5%
to
£27.60
each
in
London
on
Monday
afternoon
soon
after
the
BHP
announcement.
They
were
down
2.2%
to
ZAR
627.22
in
Johannesburg.
BHP
has
its
primary
listing
in
Sydney.
In
London,
its
shares
were
quoted
at
£22.95,
up
0.1%.
The
revised
proposal
represents
a
15%
improvement
in
the
merger
exchange
ratio,
BHP
noted.
It
increases
the
holding
that
Anglo
shareholders
would
have
in
the
combined
entity
to
16.6%
from
14.8%
previously.
BHP
has
a
market
capitalisation
of
£116.07
billion,
while
Anglo’s
market
cap
is
£36.90
billion.
BHP
also
offered
Anglo
two
positions
of
the
board
of
the
combined
company.
However,
BHP
said
that
Anglo
rejected
its
revised
proposal
on
Monday.
Commenting,
BHP
Chief
Executive
Officer
Mike
Henry
said:
“BHP
put
forward
a
revised
proposal
to
the
Anglo
American
board
that
we
strongly
believe
would
be
a
win-win
for
BHP
and
Anglo
American
shareholders.”
“We
are
disappointed
that
this
second
proposal
has
been
rejected.”
As
part
of
the
proposed
deal,
BHP
wants
Anglo
American
to
split
off
Anglo
American
Platinum
and
Kumba
Iron
Ore
in
South
Africa.
South
Africa’s
state-owned
asset
management
firm
Public
Investment
Corp
last
week
signalled
that
it
remains
open-minded
about
BHP’s
bid
for
Anglo-American.
PIC
has
a
7.0%
stake
in
Anglo
American,
according
to
Morningstar.
What
We
think
of
the
BHP-Anglo
American
Deal
Key
Morningstar
Metrics
for
Anglo
American
Stock
•
Fair
Value
Estimate
for
AAL:
£20.80
•
Morningstar
Star
Rating:
★★
•
Morningstar
Economic
Moat
Rating:
None
•
Morningstar
Uncertainty
Rating:
High
Key
Morningstar
Metrics
for
BHP
Stock
•
Fair
Value
Estimate
for
BHP:
£21.00
•
Morningstar
Star
Rating:
★★
•
Morningstar
Economic
Moat
Rating:
None
•
Morningstar
Uncertainty
Rating:
Medium
When
the
initial
transaction
proposal
was
announced,
Morningstar’s
equity
analyst
Jon
Mills
said
the
deal
would
be
roughly
equal
to
Morningstar’s
base-case
fair
value
estimate
for
Anglo
–
but
only
gave
the
deal
a
50%
chance
of
being
successful.
“We
think
Anglo
is
now
in
play,
with
its
copper
assets
in
Peru
and
Chile
the
main
attraction
to
potential
suitors
also
optimistic
about
its
outlook.
But
the
list
of
potential
acquirers
with
the
size
and
balance
sheet
capacity
to
bid
is
limited,
and
includes
Rio
Tinto,
Vale,
and
perhaps
Glencore,”
he
said
in
a
note.
“Given
Anglo’s
share
price
has
trailed
BHP’s,
Rio
Tinto’s
and
Glencore’s
recently,
BHP’s
proposal
is
opportunistic
and
we
see
some
merit
to
the
deal.
The
assets
are
mainly
located
in
jurisdictions
such
as
Chile,
Peru,
Brazil,
and
Australia,
where
BHP
operates.
For
context,
the
cost
to
purchase
Anglo
excluding
its
PGMs
business
and
Kumba
is
around
17%
of
BHP’s
equity
value.
The
enlarged
BHP’s
balance
sheet
is
also
strong,
with
pro
forma
net
debt/trailing
12-month
EBITDA
of
around
0.6.”
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
