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Anglo American has rejected BHP’s call to extend takeover talks, saying the Australian miner had failed to address its concerns over the “highly complex and unattractive structure” of a proposed deal.
Anglo’s refusal came ahead of a 5pm UK time deadline for Melbourne-based BHP to make an offer for the company or walk away from a proposed £39bn deal that would reshape the mining industry.
The groups have been in talks since May 22 in an effort to agree on the structure of the deal.
BHP’s three approaches had all required Anglo to spin off its two South African businesses — a demand that angered the government in Pretoria and which Anglo strongly opposed.
Responding to a request from BHP to extend talks, Anglo said the Australian company had not addressed “fundamental concerns” relating to the structure of its proposal and the board had concluded that “there is no basis for a further extension”.
In a statement earlier on Wednesday, BHP said “a further extension of the deadline is required to allow for further engagement on its proposal”.
BHP, which wants to acquire Anglo to boost its copper operations, said the risks associated with its takeover plan were “quantifiable and manageable”, adding that the costs of the planned measures had already been built into its offer.
“BHP is confident that the measures it has proposed to the board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals,” it said.
Talks between the companies reached an impasse in the run-up to the deadline with the structure of the deal the key sticking point, according to people with direct knowledge of the negotiations.
“BHP is clearly appealing to target shareholders to put pressure on Anglo’s board to grant them an extension — it is clear that they think in the absence of this the transaction will fall apart later today,” said Mark Kelly, chief executive at MKP Advisors.
BHP has taken advice from Michael Katz, chair of Africa’s largest law firm ENS, to advise the company on issues including tax, regulation and the social impact of its takeover offer, according to a person with direct knowledge of the Australian company’s plan.
BHP’s proposal includes maintaining Anglo’s Johannesburg office at current staffing levels, listing BHP shares in South Africa and sharing in the cost of increased South African employee ownership of the two units, if required. It said it would maintain these measures for at least three years after a deal has been completed.
BHP also said it was willing to discuss a break fee that it would pay should a potential deal be blocked by regulators, including in South Africa.
This story has been amended since initial publication to state that BHP is based in Melbourne, not Sydney
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