BHP share price on watch after Anglo American takeover update

BHP is seeking an extension to its deadline to get a deal over the line.

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The BHP Group Ltd (ASX: BHP) share price will be one to watch on Thursday.

That's because the mining giant has just released an update on its proposed takeover of copper giant Anglo American plc (LSE: AAL).

What's the latest?

BHP notes that on 22 May the Board of Anglo American granted an extension to the deadline for BHP to make a takeover offer.

The Big Australian welcomed the extension as it provided it with the opportunity to engage with Anglo American about its concerns regarding BHP's proposal. That proposal would see BHP acquire the miner for approximately $75 billion.

According to the release, since the extension to the deadline was granted, BHP has continued to work extensively to address those matters. This has included several engagements with Anglo American and its advisers.

BHP is 'confident'

This afternoon, BHP has released an update on its discussions with the Anglo American team and revealed that it is confident it can resolve matters. It said:

BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals. BHP has considered market precedent transactions and believes that the risks are quantifiable and manageable. BHP has already factored the costs associated with these risks into the offer ratio of its proposal.

In addition, BHP has advised that it would be willing to discuss an appropriate reverse break fee. This would be payable by BHP on failure to achieve the necessary anti-trust and regulatory approvals, including in South Africa.

Deadline extension requested

BHP has requested that Anglo American extend the deadline again. It said:

BHP believes that the proposed measures it has put forward provide substantial risk protection for Anglo American shareholders and supplement the significant value uplift that Anglo American shareholders will receive from the potential combination. BHP believes a further extension of the Deadline is required to allow for further engagement on its proposal.

Extension request rejected

Unfortunately for BHP, it has not done enough to sway the Anglo American board and its request for an extension has been rejected. Anglo American told the London Stock Exchange:

In aggregate, BHP has not addressed the Board's fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American's shareholders. Also taking into consideration detailed feedback from the Board's extensive engagement with Anglo American's shareholders and stakeholders, the Board has therefore unanimously concluded that there is no basis for a further extension to the PUSU deadline.

Editors note: article updated at 7:25pm

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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