Anglo shareholder PIC demands ‘meaningful revision’ to BHP bid

South Africa’s state-owned Public Investment Corporation, the second-largest shareholder of Anglo American, said that BHP would need to make a “meaningful revision” to its offer for its smaller rival, hours before a takeover deadline expires for the £34bn mining mega-deal.

The PIC said in a last-minute intervention on Wednesday that it would only support a higher BHP offer, which ought to reflect the value of Anglo’s mines, as well as future options that the Australian company could benefit from through a takeover, such as growth opportunities and asset sales.

“This would require a meaningful revision of the current BHP proposal,” said Abel Sithole, chief executive of PIC. He added that it “should take into consideration the material risks that current shareholders of both Anglo and its subsidiaries would have to assume over an extended timeframe”.

The intervention by the PIC, which holds 7.4 per cent of Anglo and about 0.9 per cent of BHP, according to Bloomberg data, comes as the clock ticks down to a 5pm deadline for BHP to declare a formal offer for Anglo or drop its takeover approach.

BHP’s takeover attempt is hanging by a thread after a furious political backlash in South Africa, the Australian group’s insistence on a controversial deal structure, and Anglo’s own strategic pivot to break itself up and focus on just copper and iron ore.

Anglo has rebuffed two takeover proposals from BHP, with the most recent proposal valuing it at £27.53 per share. The value of the all-share deal has risen closer towards £30 per share but the reason for that has primarily been an increase in BHP’s share price as investors bet that the deal will not happen.

Anglo’s shares dropped 1 per cent in London trading on Wednesday to £26.83.

Under BHP’s proposals, Anglo would need to spin off its South African platinum and iron ore units as part of the agreement — which has led to the deal being perceived as a vote of no confidence in the country.

To date, the PIC has equivocated over its preferences but the last-minute intervention clarifies what BHP would need to do to win its support.

Sithole added that “there has to be future and perpetual participation by South African shareholders in the acquired assets” through the Johannesburg Stock Exchange.

The PIC said that it also recognised the “positive impact” of Anglo on the economy of South Africa, where the company was founded more than a century ago, and warned that this “should not be diminished” as a result of BHP’s proposed offer.

Analysts say that going hostile has never really been a tenable option for BHP under the proposed deal structure because it would need the co-operation of the Anglo board to execute the demergers of Amplats and Kumba Iron Ore, the two South African units that BHP does not want.

The PIC said that it “will continue to engage both companies”.