Mining giant Anglo American has rejected a revised multibillion-pound buyout offer from BHP.
Anglo American, the company behind the multibillion-pound Woodsmith fertiliser project in North Yorkshire and Teesside, last month declined a takeover offer which valued it at about £31bn, saying its board had unanimously agreed that it significantly undervalued the company. Now a £34bn bid has also been refused.
In a stock market update, BHP said it was "disappointed" that South Africa-based company Anglo American had rebuffed the offer, in what would have been the biggest deal in the mining sector for a decade. As well as the uplift in value, the new offer would have given Anglo American shareholders a 16.6% stake in the new company, up from 14.8% in the first.
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Under the potential deal, BHP said it would offer £27.53 a share, including £4.86 in subsidiary Anglo Platinum's shares and £3.40 in iron ore business Kumba's shares. But Stuart Chambers, chairman of Anglo American, said "The latest proposal from BHP again fails to recognise the value inherent in Anglo American.
"Anglo American shareholders are well positioned to benefit from increasing demand from future enabling products while the increasing capital intensity to bring greenfield supply online makes proven assets with world class resource endowments ever more attractive."
The deal would be another blow to the London stock market, with the loss of Anglo American from the top tier of shares and another FTSE 100 mainstay. Shares in Anglo American fell after the rejection news emerged, and were trading 0.9% down on Monday afternoon.
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While Anglo American is London-listed it was founded in South Africa and has its headquarters in the country, where politicians and unions have said they are against the takeover. Mining minister Gwede Mantashe said BHP's merger with South African miner Billiton in 2001, "never did much" for the country after the first offer was rejected.
The country's government-owned Public Investment Company is Anglo American's largest stakeholder, holding a 7% stake in the company. BHP's bids have also sparked reports that the Swiss mining company Glencore and British-Australian miner Rio Tinto are also considering making approaches.
Anglo American's vast reserves of copper are a key driver of the interest in the business, as the mineral is an important building block for low-carbon technologies such as solar farms and electric cars. Demand for the metal could double by 2035 and lead to supply shortfalls, according to S&P Global forecasts. The takeover would create the world's biggest copper miner, with around 10% of global output.
Mike Henry, BHP chief executive, said he and other directors "strongly believe (the offer) would be a win-win for BHP and Anglo American shareholders".
"BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world-class businesses. The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets.
"The combined business would also have the balance sheet strength, capital discipline and operational capability to execute the attractive pipeline of growth options in BHP and Anglo American's portfolios."