Anglo American has rejected a US$39 billion takeover proposal from BHP Group, saying it significantly undervalues the company.

Under the proposed all-share deal, Anglo would first spin off controlling stakes in South African platinum and iron ore companies to its shareholders before being acquired by BHP. The total per-share value of the non-binding proposal was about £25.08 (S$42.66), BHP said Thursday (Apr 25).

Anglo’s rejection was widely expected. Analysts and some Anglo investors had seen BHP’s proposal as well below the sort of price that would bring the 107-year-old miner to the table. BHP will now have to improve its offer if it wants to start talks.

“The BHP proposal is opportunistic and fails to value Anglo American’s prospects,” Anglo chairman Stuart Chambers said in a statement. “The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders.”

A tie-up with Anglo would give BHP roughly 10 per cent of global copper mine supply ahead of an expected shortage that many market watchers have predicted will send prices soaring.

If successful, the transaction would mark a return to large-scale dealmaking for BHP, while potentially flushing out other suitors aiming to boost their exposure to the metal that’s closely linked to the global energy transition. BLOOMBERG

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