Anglo
American
(AAL)
on
Tuesday
unveiled
a
new
“radical”
strategy
that
will
see
it
keep
copper
and
iron
ore
assets,
while
getting
rid
of
platinum
and
diamond
businesses.
The
move,
which
follows
a
“comprehensive
asset
review”,
comes
a
day
after
the
London-based
mining
company
rebuffed
a
sweetened
offer
from
BHP
Group
(BHP),
its
major
peer.
The
new
all-share
offer
from
Melbourne-based
BHP
valued
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.
As
part
of
the
proposed
deal,
BHP
wants
Anglo
American
to
split
off
Anglo
American
Platinum
Ltd
and
Kumba
Iron
Ore
Ltd
in
South
Africa.
On
Monday,
BHP
confirmed
it
had
made
an
improved
offer
to
buy
Anglo
American
last
week,
but
said
the
offer
was
rejected
by
the
Anglo
board
on
Monday.
To
unlock
shareholder
value
and
to
simplify
its
portfolio,
Anglo
American
said
on
Tuesday
said
it
intends
to
“demerge”
Anglo
American
Platinum
Ltd,
and
“divest”
or
“demerge”
De
Beers
as
part
of
its
new
strategy.
The
diversified
miner
also
wants
to
divest
its
steelmaking
coal
business,
saying
it
is
already
responding
to
“strong”
buyer
interest.
It
is
also
exploring
options
for
care
and
maintenance
and
divestment
of
its
nickel
operations.
In
what
it
called
“the
most
radical
changes”
in
decades,
Anglo
said
it
has
decided
to
focus
on
copper
and
iron
ore,
while
retaining
its
crop
nutrients
“optionality”
at
Woodsmith.
Following
Anglo
American’s
rejection
of
the
BHP
bid,
Morningstar
raised
the
mining
stock’s
fair
value
from
£20.80
to
£22.50.
The
stock
is
down
3%
since
market
open
on
Tuesday
at
10:00
AM,
trading
at
£26.17.
Read
more
about
Morningstar’s
equity
analyst
Jon
Mills’
take
on
Anglo
here.
Key
Morningstar
Metrics
for
Anglo
American
Stock
•
Fair
Value
Estimate
for AAL:
£22.50
•
Morningstar
Star
Rating:
★★
•
Morningstar
Economic
Moat
Rating:
None
•
Morningstar
Uncertainty
Rating:
High
In
a
statement,
Anglo
American’s
CEO
Duncan
Wanblad
commented:
“We
expect
that
a
radically
simpler
business
will
deliver
sustainable
incremental
value
creation
through
a
step
change
in
operational
performance
and
cost
reduction.
“Anglo
American’s
shareholders
will
see
the
full
undiluted
upside
from
these
extensive
changes,
with
the
value
of
our
copper
and
iron
ore
assets
brought
to
the
fore.”
“This
next
step
in
the
transformation
of
Anglo
American’s
portfolio
is
set
to
accelerate
the
recognition
of
value
that
has
been
inherent
in
our
business
for
many
years
and
provide
Anglo
American’s
shareholders
with
undiluted
and
differentiated
participation
in
the
major
structural
demand
trends,
while
minimising
any
frictional
costs
associated
with
this
major
portfolio
transformation,”
Wanblad
said.
Anglo
American
also
said
on
Tuesday
it
is
on
track
to
achieve
the
previously
announced
run
rate
of
$1
billion
annual
savings
in
operating
expenditure
in
2024.
Additionally,
a
further
$800
million
of
cost
out
from
the
end
of
2025
is
targeted.
Anglo
shares
were
down
0.9%
at
2,681.00
pence
each
in
London
on
Tuesday
morning.
They
were
down
1.6%
to
ZAR
624.67
in
Johannesburg.
BHP
has
its
primary
listing
in
Sydney,
where
its
stock
ended
0.2%
lower
at
AUD
43.15
on
Tuesday.
In
London,
its
shares
were
up
1.5%
to
£23.16.
In
South
Africa,
they
rose
1.8%
to
ZAR
537.45.
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