After a weekend of speculation, BHP (BHP) has officially closed the door on acquiring Anglo American (AAUKF). The timing is notable: Anglo's shareholders are set to vote in just weeks on a $53 billion merger with Teck Resources (TECK).
According to reports, BHP had quietly re-engaged with Anglo's management despite spending much of the year distancing itself from acquisition rumors. This time around, the Australian commodities giant pitched a simplified proposal that avoided the messy break-up structure that sank its previous $49 billion bid.
"It's a last throw of the dice for BHP," said Andy Forster, portfolio manager at Argo Investments. "I'm a bit surprised that, given the relative performance, they thought they were in a position to come back and do another deal and extract value for shareholders."
By Monday, the world's largest miner issued a statement putting the speculation to rest. While acknowledging the "strong strategic merits" of a potential transaction, BHP said it would stick with its organic growth pipeline instead.
The Copper Prize
BHP's interest wasn't complicated: it wanted Anglo's copper operations in South America. Those assets in Chile and Peru are considered some of the best in the business. With copper demand expected to surge through the energy transition and new supply limited, Anglo has been a perpetual takeover target despite operating a hodgepodge of niche businesses.
BHP currently holds the crown as the world's largest copper producer, but without major new projects, it could lose that title within a decade.
Meanwhile, Anglo's pending merger with Teck would be transformative in its own right. The $53 billion deal, announced in September, would combine two significant copper pipelines and create a company with output comparable to Chile's Escondida mine, one of the industry's giants. If completed, it would rank as the second-largest mining deal ever, trailing only the Glencore-Xstrata merger from 2013.
BHP's withdrawal removes the final "what if" hanging over the shareholder vote scheduled for December 9. But even if investors approve the creation of what some are calling "Anglo Teck," there's another hurdle ahead.
The deal still needs regulatory approval under the Investment Canada Act, giving Ottawa significant leverage over commitments around domestic jobs and where the combined company would be headquartered.
Price Action: BHP shares were trading lower by 0.62% to $52.75 in premarket trading Monday.
