BHP share price tumbles as $74 billion deal evaporates

BHP shares won't be encompassing Anglo American's copper assets after all.

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The BHP Group Ltd (ASX: BHP) share price is sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $45.08. In morning trade on Thursday, shares are changing hands for $44.50 apiece, down 1.3%.

For some context, the ASX 200 is down 0.8% at this same time.

The BHP share price is slipping as ASX investors digest the news that BHP's $74 billion takeover offer for global miner Anglo American (LSE: AAL) will not proceed.

At least, not anytime soon.

BHP share price slides on rejected takeover extension

As the Motley Fool reported last night, BHP's three consecutively better bids for Anglo American (the first lobbed on 26 April) were not enough to convince the miner's board that the offer presented better value for shareholders than they could deliver themselves.

A decision that looks to be pressuring the BHP share price today.

Last night, with just hours to go before the takeover deadline stipulated under British regulations was reached, BHP CEO Mike Henry still sounded confident that a deal, which would have seen BHP become the world's biggest copper miner, might yet be reached.

Having received a one-week extension to the takeover deadline last week following its third acquisition bid, BHP requested another extension on the discussions yesterday.

The miner stated:

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.

Anglo's board was having none of it, however. Anglo replied:

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.

The board unanimously decided not to extend the deadline, which came at 5pm London time.

Mike Henry responds

Commenting on the end of the takeover negotiations that's seeing the BHP share price underperforming today, CEO Mike Henry said in no uncertain terms, "BHP will not be making a firm offer for Anglo American."

Henry continued:

BHP is committed to its capital allocation framework and maintains a disciplined approach to mergers and acquisitions.

While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost and, despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive.

We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.

Now what?

Anglo American appears determined to go its own way. Though it's always possible other suitors could come knocking.

Under British regulations, BHP cannot make another offer for at least six months, unless a competing offer comes in from another company.

With today's intraday losses factored in, the BHP share price remains up 3% over 12 months.

Motley Fool contributor Bernd Struben 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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