Anglo American’s South Africa investors open to improved BHP bid

Anglo American’s key South African shareholders are open to a takeover offer from BHP, with some advocating for an additional cash component to the bid, the Financial Times reported on Thursday.

The investors who collectively hold more than 15% of Anglo American, told FT that BHP, the world’s biggest listed mining group, would need to sweeten its offer and they were not opposed in principle to an acquisition by the Australian group.

FT, in its report, cited fund managers with minority stakes in Anglo, stating a higher, more straightforward offer from BHP, possibly with a cash component or without the condition of selling Anglo’s South African assets would be looked upon “favourably” and could be struck.

“Other local fund managers said the complexity of the deal structure … requires an even higher premium than if the whole business was being bought,” FT said in its report.

Late last month, Anglo American rebuffed BHP’s $39 billion scrip takeover proposal, saying it significantly undervalued the London-listed miner and its prospects.

The Australian group wants Anglo to spin off its controlling stakes in local mining companies Anglo American Platinum (Amplats) and Kumba Iron Ore, which have a combined equity value of about $13 billion.

The proposal is also seen as complicated because of political sensitivity around the deal and the economic ramifications for the country, where the miner is a major employer.

The South African government has been scrutinizing the proposed deal. The country’s mining minister, Gwede Mantashe, has previously told the press that he was wary of BHP’s proposal as the country’s previous experience with BHP was “not positive”.

Anglo American declined to comment, while BHP did not immediately respond to a Reuters request for comment.

(By Gursimran Kaur, Sameer Manekar and Urvi Dugar; Editing by Shailesh Kuber and Tasim Zahid)