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The assumption is that once a bidder shows his money, the fate of the target company is decided.
BHP has made two attempts at Anglo American, first with a £31bn bid and now with a second £34bn bid. Both have been roundly rejected.
Comments from Anglo’s main investors have been negative. Nobody likes the conditionality of the deal, which requires the sale of a minority of two Anglo-Saxon companies to the South African stock exchange.
There is also uncertainty about what will happen to commodity prices between now and a dozen regulatory authorities around the world give their opinion.
Whatever direction BHP takes, there is now a belief that the London-listed South African miner will be gobbled up. Anglo will seek to end this today when it outlines a standalone strategy.
No deal: BHP has made two attempts at Anglo American, first with a £31bn bid and now with a second £34bn bid. Both have been roundly rejected.
BHP’s rivals are circling. Glencore has done nothing to discourage speculation. It shares ownership of the Collahuasi copper mine in Chile with Anglo American. There is speculation that iron ore giant Rio Tinto could be tempted to enter the fray.
The belief that the rolling bid bulldozer is unstoppable is due to several factors. Anglo chairman Stuart Chambers has in the past shown little inclination to put his shoulder to the wheel in defending UK assets from predators.
Listed companies that were sold under his leadership include Pilkington, Rexam and Cambridge technology pioneer Arm Holdings.
The deals act as a wake-up call to boards and management. In the 1990s, Lord Hanson’s influence at ICI led to the disintegration of Britain’s most established industrial giant which, with the help of Goldman Sachs, ousted the interloper. ICI made the splits and AstraZeneca, Britain’s most valuable listed company, was born.
Anglo American, so far, seems ready for the fight. The board, along with advisors Centerview, Goldman and Morgan Stanley, has been working on a strategic plan that could unlock value for existing investors and maintain faith in its South African heritage. One idea is to separate its most attractive branch, the diamond miner De Beers.
Copper is the jewel sought by Anglo’s competitors and is becoming increasingly valuable. Prices are rising and are near a decade high of $10,140 a tonne amid demand for green technologies.
Anglo has a time advantage in reshaping itself, as bids from BHP, Glencore, Rio or Canada’s First Quantum would face long delays for competition approvals.
There is a mixed history of mining mergers. JP Morgan estimates that Rio has wasted £43bn on poor M&A decisions.
However, deals are always attractive to executives and investors because they provide a route to cash out. It will take enormous determination to pursue an independent strategy.
Commercial places
When it comes to attracting foreign investors and commerce, Paris knows how to roll out the red carpet.
Its ‘Choose France’ event this week, designed to attract around £14bn in new investment, will include champagne receptions at the Elysee Palace and other blandishments. A delegate from a recent UK trade delegation to Singapore tells a different story.
When a powerful group of chief executives disembarked from the Government plane, it was explained that the local embassy lacked the budget to transport them to its hotels and events.
An enterprising Lords business adviser found himself outside the terminal evoking a fleet of cars from Grab, an Uber-style car service, amid dismayed murmurs.
One is confident that this week’s trade attack on Saudi Arabia, led by Deputy Prime Minister Oliver Dowden, will be better prepared.
anonymous genius
Jim Simons, who has just died, was an American mathematician and financier that most people will never have heard of.
However, the academic, who became an entrepreneur at age 40, eclipsed the long-term performance of Warren Buffett and George Soros’ Oracle of Omaha.
Using sophisticated mathematics and employing scientists, his Medallion fund earned $100 billion (£80 billion) in 30 years, an average annual return of 66 per cent per year.
At its peak, its model was responsible for a third of all Wall Street trading.
Who knows?
