Anglo American has dug deep and come up with a compelling plan to preserve independence.
Much of its strategy – divestment of De Beers and Anglo American Platinum – is said to have been underway as part of a strategic review before BHP’s Mike Henry arrived on the scene with his twice-rejected deal.
Anglo CEO Duncan Wanblad’s intention was to wait until the South African elections scheduled for May 29.
With its long and deep heritage before and after apartheid, Anglo was sensitive to not being drawn directly into a toxic political debate.
What is clear is that Anglo’s relatively quick, surprisingly detailed and convincing response reflected chairman Stuart Chambers’ determination to dispel the notion that he was never greeted with a procurement approach he didn’t like.
No deal: Anglo American has rejected two takeover offers from rival BHP, which wants to take over the British mining giant’s copper assets.
BHP will be disheartened by the cold response to what it considered a sensible second bid.
Henry recognizes the potential dangers of becoming embroiled in a long and complex acquisition battle.
He has a disciplined approach to deal-making and knows that without Anglo’s board and big investors on his side things could get complicated.
BHP covets the copper assets that will be at the heart of a slimmed-down Anglo American. No one should rule out a return to work within six months.
This would especially be the case if Wanblad’s self-help plan fell down a mine shaft.
As with BHP’s bid, Anglo’s strategy has several moving parts.
What draws most attention is the proposed sale of De Beers, for so long the central core of the Oppenheimer family era.
The highest price could come from a Gulf wealth fund fascinated by a luxury asset, albeit one with mines attached. There is a real opportunity here for the London Stock Exchange and investors to show their strong support for a listing in the City.
An initial public offering, which would potentially value diamond interests of up to £4bn, would reaffirm the UK’s strength as a hub for natural resources companies.
Wanblad, its executives and advisors now face the challenge of execution.
There is a lot of risk, but perhaps less than for BHP. The sale of platinum to current Anglo shareholders in South Africa will be possible without antitrust measures or other regulatory criticism.
There should be buyers for coking coal steel operations. Glencore has been doubling down. He argues that it is better for a well-known listed company to be in charge of coal assets than for an unknown entity.
Anglo has bet big on Woodsmith, the vast British fertilizer project. You want to stay committed, you will cut immediate capital investment, complete a feasibility exercise and then decide next steps. Ideally, you would attract partners to share the development costs. There is a determination not to let go.
Too often, when faced with an offer, UK-listed companies fall at the first hurdle. Many are exposed due to divestment by UK pension funds, leaving diverse global investors, with little interest in wealth or the public interest, in control of the share registry.
Anglo is showing resilience and its radical rationalisation, an alternative to taking the money and running, is refreshing.
Californian dream
Full marks to the ambition of Jeremy Hunt, who tells the Financial Times he would like Britain to create a $1 trillion home-grown company as part of his goal of creating the next Silicon Valley.
Think again, Chancellor. Currently, the closest thing we have is AstraZeneca, valued at $239 billion and if Theresa May’s government had its way, it would now be on the other side of the Atlantic like Pfizer’s toy.
Every time the UK has a promising tech company, it ends up in foreign or private equity hands.
Cambridge’s brainpower is a particular target, with Arm, Aveva and Darktrace among the exits from London listings.
AI pioneer Deep Mind left for Google long ago and self-driving pioneer Wayve now has Softbank as its largest financier. Good luck with that if the Arm experience is a model.