A 24% premium still failed! BHP reportedly had its £40 billion offer rejected, while Anglo American insists on pursuing its own merger plans.

Recent news shows that despite a premium of more than 20% over the offer, BHP Group, the world’s largest mining company, has failed in its second attempt to acquire Anglo American.

On Monday, December 1st, Eastern Time, media reported that BHP Group offered about £40 billion (approximately $53 billion), but was ultimately rejected by Anglo American's board. Sources revealed that BHP's latest bid was about £34 per share, representing a premium of approximately 24% over Anglo American’s closing price of £27.36 on November 20.

On November 20, BHP sent a detailed proposal to Anglo American's board, mainly in the form of shares with some cash included. However, after evaluation, Anglo American believed its ongoing acquisition of Canada's Teck Resources could create greater value, while also expressing concerns that a deal with BHP might face a lengthy regulatory approval process.

Sources revealed there were two main reasons Anglo American rejected BHP’s £40 billion bid. First, Anglo American believes its merger with Teck Resources will generate greater value. Second, it fears the regulatory approval process for a deal with BHP would be excessively protracted, with fluctuations in BHP’s share price potentially having a significant impact on the final transaction value.

It’s worth noting that BHP’s offer represented almost a 50% premium over the closing price on the day before the Teck Resources merger announcement on September 8. On Monday, Anglo American shares listed in London rose nearly 3% at intraday highs and closed up about 1.1%, marking a new closing high since late October. BHP’s UK shares closed up 0.8%, with a cumulative gain of around 13% this year.

On Monday, November 24, BHP issued a statement confirming the discussions, but said that it "is no longer considering any potential combination." This failed bid happened at a critical juncture, as Anglo American and Teck Resources shareholders are set to vote on the merger plan on December 9. The size of this offer reflects intense competition among mining companies for premium copper assets, as the global energy transition speeds up and copper—key for infrastructure like grids and electric vehicles—grows even more strategically valuable.

As reported by WallstreetCN last week, BHP’s decision to act right before the merger vote was seen in the market as a carefully planned interception. The December 9th voting deadline prompted BHP to propose an alternative plan to Anglo American.

Barrenjoey analyst Glyn Lawcock described this move as BHP’s "last roll of the dice," aimed at acquiring Anglo American's coveted South American copper assets. He noted that after last year's failed bid, Anglo American’s merger plan with Teck Resources and its own asset restructuring changed BHP’s board’s considerations.

At the heart of this acquisition battle is the pursuit of copper assets. Anglo American has long been seen as a takeover target precisely because of its attractive copper asset portfolio. If the merger with Teck Resources succeeds, the resulting company will be one of the world’s top five copper producers, and the two companies’ neighboring mines in Chile’s Andes will bring significant synergies.

Since the merger plan was announced, major miners including BHP, Rio Tinto, and Glencore have all been assessing their options. BHP CEO Mike Henry emphasized in a statement that "a merger with Anglo American has strong strategic advantages and can create significant value for all shareholders."

But BHP's swift withdrawal indicates it does not intend to engage in an expensive bidding war. Last week, some bankers expressed surprise at BHP’s exit: "I thought they would come back to complete it, but coming back and then not pushing through is quite unexpected."

This marks the second time BHP has stumbled due to the complexity of Anglo American's business. Last year, BHP made several bids that were all rejected; the proposals required Anglo American to first spin off its Australian coal, diamond, and platinum businesses, which Anglo American dismissed as "highly complex and unattractive."

Risk Disclosures and DisclaimerThe market has risks, and investment needs to be prudent. This article does not constitute personal investment advice, nor does it consider the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment made accordingly is at your own risk.