BHP’s Higher Anglo American Offer Makes a Deal More Likely, but Is It Overpaying?

No-moat Anglo has again rejected no-moat BHP’s overtures despite a sweetened all-share proposal via a scheme of arrangement. BHP’s latest proposal has Anglo shareholders receiving 0.8860 BHP shares for each Anglo share held, around 9% higher than the previous proposal and about 25% higher than the original proposal (see our note 'BHP Lobs All-Share Proposal for Anglo American; Shareholders Take No Action'). While again rejecting BHP, Anglo has successfully requested a one-week extension to the deadline under the United Kingdom's takeover and mergers code. BHP will have until May 29, 2024 to either announce a firm intention to make an offer or walk away. The suitor has maintained the other conditions of the proposal, including Anglo American first demerging and distributing its 78.6% shareholding in Anglo American Platinum, or Amplats, its platinum group metals business, and 69.7% shareholding in Kumba Iron Ore to its shareholders.