BHP walks away from £39bn bid for rival Anglo American

BHP has called for an extension to takeover talks with Anglo American (Anglo American/PA)

A potential mining mega-merger has been stopped in its tracks after BHP confirmed it would not be making a bid for Anglo American.

Australia’s BHP said on Wednesday afternoon that it had been unable to reach an agreement with the rival miner over specific issues.

The companies have been in talks over a deal worth almost £39 billion since Wednesday May 22 amid efforts to agree on the structure for a potential takeover.

BPH had a deadline of 5pm on Wednesday to make a firm offer or walk away from takeover talks.

“While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American,” Mike Henry, BHP’s chief executive, said.

Mr Henry was referring to BHP’s requirement, in its takeover approaches, for its rival to spin off its South African operations, resulting in heavy criticism from the government in Pretoria.

Anglo American also opposed this.

Mr Henry added: “We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.”

In response to BHP abandoning the possible bid, Anglo American’s chairman Stuart Chambers said: “Anglo American has set out a clear pathway to accelerate delivery of its strategy and to unlock significant value for its shareholders.

“Our shareholders will benefit from value transparency and undiluted exposure to a simpler portfolio of world-class assets, consistently stronger operational performance, and highly attractive growth in copper, premium iron ore and crop nutrients.”

The FTSE 100-listed company is “fully focused” on achieving its plans to boost value “at pace”, he added.

A mega-merger between the two companies would have created the biggest copper miner in the world, with 10% of global output.

Anglo American’s vast reserves of copper are a key driver of the interest in the business, as the mineral is an important building block for low-carbon technologies such as solar farms and electric cars.

Earlier this month, Anglo American announced plans to break up major parts of the business and heavily slow down its development of a £7 billion North Yorkshire fertiliser mine.