Saturday, June 15, 2024

Anglo American plans break-up after rejecting £34bn takeover bid

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FTSE 100 mining giant Anglo American has revealed plans to break itself up, hours after it rejected a takeover bid from a larger rival.

Anglo said it would sell or demerge its 85% stake in De Beers – the world’s biggest diamond miner.

The company also planned to sell its thermal coal assets and will demerge its shareholding in Johannesburg-listed Anglo American Platinum, known as Amplats.

Anglo said it would focus in future on its copper, iron ore and crop nutrient assets.

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However, it warned that job losses were possible amid plans to slow work on the Moorside mineral fertiliser mining project in North Yorkshire.

The announcement was made a day after Anglo rejected the raised offer from Australian-based BHP.

Anglo said the £34bn bid continued to significantly undervalue the company and was “highly unattractive” for its shareholders.

Remote drill rigs in the Leeufontein pit in South Africa. Pic: Anglo American

The firm argued that its new plan would lower annual costs costs by $1.7bn.

Chief executive Duncan Wanbled told investors: “We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction.

Anglo shares were trading more than 2.5% down in the wake of the announcement, suggesting shareholders were not won over on the company’s roadmap.

It has been in widespread discussions with investors since BHP’s initial approach in April.

They followed a review of all of its assets in February in response to a 94% plunge in annual profit and writedowns at its diamond and nickel operations.

AJ Bell investment director Russ Mould said of the situation: “The plan has been greeted with a shrug by the market and it raises a troubling question for the incumbent management: why has it taken a takeover approach to prompt this radical action if it’s the right strategy for the future”?

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