Anglo American eyes break-up as it fends off BHP bid

The announcement comes a day after the London-listed miner rejected a raised $43 billion offer from BHP, saying it continued to significantly undervalue the company and was "highly unattractive" for its shareholders. In a statement on Tuesday, Anglo said it was going to divest its steelmaking coal assets, demerge its platinum unit in South Africa, explore options for its nickel mines, and divest or demerge diamonds business De Beers.

Anglo American laid out plans on Tuesday for a potential break-up of the group via a demerger or sale of its steelmaking coal, nickel, diamonds and platinum businesses as it tries to fend off a takeover bid from BHP Group. The announcement comes a day after the London-listed miner rejected a raised $43 billion offer from BHP, saying it continued to significantly undervalue the company and was "highly unattractive" for its shareholders.

In a statement on Tuesday, Anglo said it was going to divest its steelmaking coal assets, demerge its platinum unit in South Africa, explore options for its nickel mines, and divest or demerge diamonds business De Beers. The group expects the new portfolio configuration will lower costs by $1.7 billion. "We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," Anglo CEO Duncan Wanblad said.

Anglo shares were down 1.2% at 26.74 pounds by 0820 GMT. Australian BHP, the world's biggest listed miner, had no immediate comment on Anglo's plan. The latest push for consolidation in the mining sector has been driven by strong appetite for copper and other metals central to the energy transition.

Wanblad said he expects the demerger from South African platinum unit Anglo American Platinum, known as Amplats, to be completed by the end of 2025, and that Amplats shareholders would not bear its costs. "I want to reiterate that I think the (platinum group metals) business is an excellent business... (and that) the diamond business is an excellent business, and I expect both of them to do extremely well," Wanblad said on Tuesday.

"But the value of them within the Anglo-American portfolio is compromised, and this is the best solution for shareholders." BHP's offer to Anglo American shareholders of 27.53 pounds per share, up from 25.08 pounds previously, required Anglo to sell its shares in iron ore and platinum assets in South Africa, a structure Anglo says is unattractive.

Wanblad said the divestment would be "completely different" in terms of time and complexity to the BHP proposal. Johannesburg-listed shares in Amplats traded down around 10% in early trade on Tuesday after news of the demerger plan.

Anglo also said on Tuesday it will slow the development of its Woodsmith fertiliser project in northeast England and look for strategic partners. First production at Woodsmith will be pushed back from 2027, Wanblad said. SELF-HELP

Anglo has been meeting investors since BHP's initial approach in April, and after a review of all of its assets initiated in February in response to a 94% plunge in annual profit and writedowns at its diamond and nickel operations. "The concern with the self-help plan announced this morning will be that it is too little too late," MKP Advisers said in a note.

"There is no timescale attached to most of the plans and it has been clear to most that many of the potential disposals across the portfolio are simply tough to execute as there are no interested parties." Anglo shareholder Aegon Asset Management said it welcomed the strategy revamp, however, saying it appears to give investors "a marked simplification of the group with over 50% of profits coming from copper, and a stronger balance sheet."

Wanblad said on Tuesday the divestment of Anglo's steelmaking coal operations could move rapidly, given the interest that is available. News that the group would seek to divest its coking coal mines would relieve Japanese steelmakers, who this week sounded the alarm about Australia's top quality metallurgical coal supply becoming concentrated in the hands of a single producer.

($1 = 0.7966 pounds) (Additional reporting by Melanie Burton in Melbourne, Sinead Cruise in London and Eva Mathews; Writing by Jan Harvey; Editing by Nivedita Bhattacharjee, Kirsten Donovan, Sonali Paul and Catherine Evans)

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