Anglo American PLC 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 Ltd, 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 also ‘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.
‘We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,’ Chief Executive Officer Duncan Wanblad said in a statement.
‘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,’ Wanblad said.
‘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,’ he 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 R 624.67 in Johannesburg.
BHP has its primary listing in Sydney, where its stock ended 0.2% lower at A$43.15 on Tuesday. In London, its shares were quoted at 2,316.30p, up 1.5%. They rose 1.8% to R 537.45.
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