Clara Denina, Amy-Jo Crowley and Anusha Sakui
LONDON (Reuters) – Anglo American management does not consider its proposed $39 billion takeover bid from BHP Group (NYSE:) attractive, two sources told Reuters, as some investors and analysts dismissed it as opportunistic.
BHP on Thursday offered Anglo shareholders 25.08 pounds ($31.39) a share, or $38.8 billion, a 31% premium to Wednesday’s market close. She will take over Anglo following the spin-off of the two assets.
Speaking on condition of anonymity because the matter is private, one of the sources said the proposal did not take into account the complexity of separating Anglo American’s (JO:) Platinum and Kumba businesses in South Africa.
BHP has until May 22 to submit a binding offer.
Anglo, which has a market value of $36.7 billion, said it would consider the offer without elaborating.
The proposed combination would create a group producing about one-tenth of global oil production, which is in demand for its use in electric vehicles and new technologies such as automation and artificial intelligence.
BHP made the offer as Anglo continues a strategic review of its assets, launched in February in response to a 94% fall in annual profits and a series of write-downs caused by weaker demand for commodities.
One of the sources said Anglo management remained “full steam ahead” with its review.
The company also looked for other ways to strengthen its position.
Anglo American in March selected investment bank RBC Capital Markets to begin the syndication process for its high-priced Woodsmith fertilizer project in northeast England, two sources close to the matter said, accelerating the search for an investor to share capital costs of 9 billion dollars.
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RBC was not available for comment.
Another source said Anglo American is seeking partners for its De Beers diamond business, which is among the assets BHP has said it would consider once any deal is completed.
Analysts, meanwhile, also say the offer is likely not enough and that Anglo American’s assets may be better suited to other major mining companies.
“This (BHP) offer is not enough to push the board or shareholders over the line,” Liberum analyst Ben Davies said.
Deutsche Bank analysts believe the “strategic rationale” for a merger could be equally strong for Rio Tinto (NYSE:) and Glencore (OTC:).
“BHP’s proposed offer has the potential to encourage alternative bidders to bid,” they said.
Rio Tinto and Glencore declined to comment on the possible interest, and BHP declined to provide any further details beyond its proposal.
Nicola Stein, a portfolio manager at Coronation Fund Managers, which owns Anglo American shares, was also dismissive.
“The offer price seems very opportunistic, especially when they say, get rid of what we don’t need before it’s … even passed, conditioning it,” Stein said.