The world’s largest mining group, BHP, has until the end of business tomorrow to make a third and final substantive offer to wholly take over Anglo American, the 85% shareholder in De Beers.
According to the Takeover Code, BHP has until 1700hrs British time to make a substantive offer to Anglo, a principle known as “put up or shut up”. The Code is governed by the Takeover Panel, a British-based independent organisation which supervises and regulates takeovers.
According to the Code, should BHP choose not to make a substantive offer, it will have to announce that it does not intend to make an offer.
BHP’s pursuit of Anglo and its two offers in the past month, both rejected, have shaken up the global mining industry, while causing great uncertainty for Botswana.
The Government of Botswana owns 15% of De Beers, a company BHP has hinted is not core to its offer for Anglo and could be disposed of.
BHP’s two rejected offers also piled pressure on Anglo to demonstrate how it intends to unlock value for its shareholders, leading the group to last week announce a strategic review which includes divesting or demerging its equity interest in De Beers.
Both Anglo and De Beers have subsequently said the equity exit will not affect the finalisation of talks for a new sales agreement or major investments such as the $6 billion underground operations at Jwaneng.
Government, meanwhile, continues to play its cards close to its chest, unwilling to disclose whether it would consider exercising its pre-emption rights in Anglo’s disposal of its De Beers’ shares. As a minority shareholder, government is entitled to a pro-rata first right of refusal in the event the larger shareholder in De Beers moves to dispose of its shares.
The decision, however, is fraught with uncertain risks and rewards, as the diamond sector faces structural demand issues from lab grown diamonds, while also benefiting from significant upside potential from natural diamond traceability initiatives and long-term supply constraints.
Anglo expects to finalise its disposal of the De Beers interest by December 2025 but the closed-door discussions being held within government could be upended by a successful BHP offer to Anglo.
A successful BHP offer to Anglo would negate Anglo’s own plans for De Beers, however, the finalisation of an Anglo purchase by BHP would likely take longer to finalise than December 2025.
Analysts have said BHP’s offer could contain short term conditions such as an earlier disposal, divestment or demerger of De Beers under conditions that could pressurise the Government of Botswana.
Permanent Secretary to the President, Emma Peloetletse, has been quoted by local media as saying government is keenly studying BHP’s pursuit of Anglo and the various permutations.
President Mokgweetsi Masisi, meanwhile, has said government’s priority is to protect the country’s interest whatever the results of BHP’s pursuit of Anglo are, as well as in the plans for De Beers announced by Anglo.
