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“[The proposal] consequently has the potential for material value leakage to be disproportionately suffered by Anglo American’s shareholders,” Chambers said.
BHP’s shares slumped 2.55 per cent to $45.06 over morning trade. Anglo’s closed down 0.91 per cent on Wednesday in London at £2662.50.
The mining giant has stalked Anglo over the past four weeks after making an initial unsolicited $60 billion offer in April, which Anglo’s board swiftly rejected.
Anglo American’s Los Bronces copper mine in central Chile would be an important part of any acquisition deal.Credit: Bloomberg
BHP’s unwelcome attention prompted Anglo to bring forward plans for a radical downsizing in which it will offload key coal, platinum and diamond projects – a defensive move unveiled to counter BHP’s second offer, which valued its target at $64.4 billion.
BHP is now proposing to swap each Anglo share for 0.8860 of its shares. The miner said that share ratio is final, unless there is an offer from a third party, or if the Anglo board is “minded to recommend an offer on better terms”.
RBC Capital Market analysts said the latest offer was positive for Anglo, but negative for BHP.
“Today’s offer ... is well above the top-range of what we see as being value accretive, and we estimate the revised final offer factors in synergies in excess of ~$US7 billion ... from Anglo’s key assets such as Los Bronces, Quellaveco and Collahuasi.”
“We believe there is too much project and synergy execution risk,” they said.
The South African government has been paying close attention to BHP’s proposed Anglo deal. The new deadline of May 29 is the date of the national election there.
Anglo employs more than 40,000 people in South Africa, where mining companies have been cutting jobs and investment, as platinum especially falls out of favour.
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South Africa’s Public Investment Corporation had said earlier that BHP should consider revising its initial proposal.
“A meaningful revision of the current BHP proposal ... should take into consideration the material risks that current shareholders of both Anglo and its subsidiaries would have to assume over an extended timeframe,” said Abel Sithole, chief executive of PIC, Anglo’s second-largest shareholder.
Analysts at JP Morgan last week said BHP would need to boost its offer by around 30 per cent to reflect fair value for Anglo and its prized copper assets in Chile and Peru.