BHP Fails to Win Over Anglo American

After five weeks of sparring, no-moat BHP has failed in its pursuit of no-moat Anglo American. BHP confirmed that it does not intend to make a firm offer for Anglo after the latter refused its request to again extend the “put up or shut up” deadline (requires a firm either to declare its intent to make an offer or withdraw for six months) under the UK's takeover and mergers code. This was driven by disagreement over the risks to Anglo shareholders of BHP’s condition under its proposal that Anglo demerge and distribute to shareholders its 78.6% interest in Anglo American Platinum and 69.7% interest in Kumba Iron Ore. As a result, we revert to our unchanged stand-alone fair value estimates of AUD 40.50 and GBX 2,080 per share for BHP and Anglo respectively, from our probability-weighted valuations of AUD 39.50 and GBX 2,300 per share.