Anglo American has granted BHP up to May 29 for talks on a possible takeover, a process that will be keenly watched by both De Beers and government on the implications for the country’s diamonds.
For the past month, BHP – the world’s largest mining company – has pursued a takeover of Anglo American as part of a push to consolidate its copper holdings. On Wednesday, BHP tabled a third increased all-share offer for Anglo valued at $49 billion (P665bn), but was again rebuffed.
Anglo, however, did leave the door open for talks “in order to allow for further engagement with BHP”.
“The Board is willing to continue to engage with BHP and its advisers on this topic and has therefore requested a one week extension to the PUSU deadline,” Anglo chairman, Stuart Chambers said in a statement on Wednesday.
PUSU, or Put up or Shut Up, is a regulation by the British Takeover Panel requiring the party pursuing a takeover to make a firm, substantive offer or declare that it does not intend to seek one. Under the regulations, if BHP decides against an offer, it would be required to make no further offers for at least six months.
On Thursday, BHP struck an upbeat tone on the potential talks and the takeover. BHP has improved its offer from the initial $39 billion, to $43 billion and the final $49 billion made earlier this week.
“Since the submission of the revised proposal, we have been engaging with Anglo American and its advisors to help mitigate the concerns associated with the implementation of the structure that led to the rejection of the revised proposal,” BHP said in a statement. “We have made progress on these topics over the course of the engagement so far and we are hopeful that resolution will be reached in the next seven days.”
BHP CEO, Mike Henry was equally optimistic.
“BHP looks forward to engaging with the board of Anglo American to explore this unique and compelling opportunity to bring together two highly complementary, world class businesses,” he said.
The latest developments could throw Anglo’s own plans for De Beers into uncertainty. Anglo, an 85% equity holder in De Beers, earlier this month announced plans to exit its shareholding in the diamond giant, a process it expects to be complete by the end of next year.
In the interim, Anglo has pledged to finalise the sales agreement government and De Beers spent more than five years negotiating. Government holds 15% shareholding in De Beers and the two are equal partners in Debswana, the entity that mines more than 90% of the country’s diamonds.
De Beers has also pledged to stand by a $6 billion investment to transform Jwaneng into an underground operation.
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.