Anglo American rejects BHP's final bid, confirming downward M&A trend

Anglo American rejected BHP's third and final all-share takeover US$49bn bid, confirming a downward trend in the mining sector's M&A activity. 

Anglo claims BHP's three bids failed to meet its economic and business expectations and that spinning off Anglo American Platinum and Kumba Iron Ore in South Africa, which would have been part of any deal, was too risky, as the South African government is one of its biggest shareholders. 

“The approvals required in relation to the BHP proposal would be likely to result in material conditions being imposed that would disproportionately impact the value of Anglo American Platinum and Kumba and, therefore, the value delivered to Anglo American’s shareholders, “ Anglo said on Thursday in a release.

Mining M&As trending downward

The value of M&A activity in the global mining industry decreased 62% in the first quarter of the year from 4Q23, when it totaled US$32.8bn. Year-on-year, the value fell 55%, according to market research firm GlobalData.

A total of 299 M&A agreements were announced for US$12.4bn in Q1, GlobalData said in a report. The largest transaction was Russian firm Mangayeza Plus' acquisition of UK-Russian gold and silver producer Polymetal for US$3.7bn.

The biggest deal last year was US company Newmont's acquisition of its Australian gold-producing rival Newcrest for US$19.3bn, followed by the US$10.6bn merger of equals between Livent and Allkem that created lithium producer Arcadium Lithium, and the acquisition of Oz Minerals by BHP for US$6.4bn with a focus on increasing copper and nickel production.

In 1Q23, Canada's Teck Resources rejected a US$22.5bn merger offer from Glencore. Meanwhile, Pan American acquired Yamana Gold for US$4.8bn, becoming a key player in the precious metals segment.

All these deals focused on achieving major synergies, strengthening production, or leveraging commercial and geopolitical advantages as global minerals demand grows.

The value of proposed, pending, completed and terminated mergers and acquisitions in the industry declined 12.5% y-o-y to US$74.2 billion in the year through mid-May, according to Bloomberg data.