Takeover target Anglo American has agreed to enter talks with suitor BHP after rejecting the Australian miner’s latest £39bn offer.
The London-listed firm, whose empire includes De Beers diamonds and a potash mine in Yorkshire, as well as vast deposits of copper and iron ore, has given its larger rival another week to discuss the terms of the deal.
It marked a significant concession by Anglo’s board, which until recently had refused to engage with BHP, having rejected two previous bids worth £31bn and £34bn.
The decision to engage in talks could pave the way for reaching an agreement.
Anglo said yesterday that it also rejected the third offer because it again included a demand for the sale of its South African business, which has become a major obstacle.
Takeover target: Anglo American, whose empire includes De Beers diamonds, has given its biggest rival, BHP, another week to discuss the terms of the deal.
It comes a week after the FTSE 100 company revealed its own “radical” restructuring to split up in a bid to fight the attempted takeover.
BHP, the world’s largest listed miner, now has until 5pm on Wednesday May 29 to make a formal offer or abandon a merger that would be the biggest deal ever in the mining sector.
City analysts previously said a bid of £40bn or more could seal a takeover.
Anglo chairman Stuart Chambers said the board rejected the offer because it “does not address concerns about the structure”.
He said the offer was too complex and posed too much risk for Anglo shareholders.
Under BHP’s proposals, it would spin off Anglo’s South African platinum and iron ore units before buying the remaining assets, including its coveted copper mines in Peru and Chile.
Anglo has estimated this could take more than 18 months. “Multiple engagements with the BHP team have still not been able to resolve concerns about these issues,” Chambers said.
“However, the board is willing to continue to engage with BHP and its advisors on this matter,” he added.
BHP said it had “made progress” on the issue and was “hopeful that a resolution would be reached in the next seven days”.
Chief executive Mike Henry said: “BHP looks forward to collaborating with Anglo American’s board to explore this unique and compelling opportunity to bring together two highly complementary world-class businesses.”
Anglo itself has revealed plans to spin off the Johannesburg-listed platinum unit, but wants to retain its Kumba iron ore business.
Under proposals for Anglo to remain an independent company, it would also sell the De Beers diamond division and its steel, coal and nickel manufacturing businesses.
Meanwhile, the future of its Woodsmith mine in North Yorkshire is at risk.