REG - BHP Group Limited Anglo American PLC - Increased and Final Offer Ratio for Anglo American

BHPAnnouncement

22/05/2024 14:30

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RNS Number : 5103P  BHP Group Limited  22 May 2024

BHP Group Limited
Exchange release
22 May 2024

 

Increased and Final(1) Offer Ratio for Anglo American plc

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS ANNOUNCEMENT IS AN ANNOUNCEMENT UNDER RULE 2.4 OF THE UK CITY CODE ON
TAKEOVERS AND MERGERS (THE UK CODE) AND IS NOT AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO
CERTAINTY THAT AN OFFER WILL BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE(2)

Increased and Final(1) Offer Ratio by BHP

BHP Group Ltd (BHP) notes the announcement by Anglo American plc (Anglo
American) regarding the extension of the deadline for a BHP proposal (the
Extension Announcement).

As stated in Anglo American's announcement of 24 April 2024, BHP was required
to either announce a firm intention to make an offer for Anglo American or
announce that it does not intend to make an offer by 5.00 p.m. (BST) on 22 May
2024. As set out in the Extension Announcement, the Board of Anglo American
requested an extension of the deadline under Rule 2.6(c) of the UK Code with
the consent of the UK Panel on Takeovers and Mergers (the Takeover Panel).

BHP confirms that on 20 May 2024 it submitted an increased and final offer
ratio to the Board of Directors of Anglo American as part of its proposal for
a potential combination with Anglo American to be effected by way of a scheme
of arrangement. In putting forward the Final(1) Offer Ratio (as defined
below), BHP has been guided by its capital allocation framework and its view
of the fundamental value of Anglo American and BHP.

The revised proposal follows BHP's initial proposal which was submitted to the
Board of Anglo on 16 April 2024 (Initial Proposal) and BHP's second proposal
which was submitted to the Board of Anglo on 7 May 2024 (Second Proposal).

The transaction structure of the revised proposal remains the same as BHP's
previous proposals and comprises an all-share offer for Anglo American subject
to the pro-rata distribution by Anglo American of its entire shareholdings in
Anglo American Platinum Ltd (Anglo Platinum) and Kumba Iron Ore Ltd (Kumba) to
Anglo American shareholders immediately before completion of the scheme of
arrangement. Since the submission of the revised proposal, we have been
engaging with Anglo American and its advisors to help mitigate the concerns
associated with the implementation of this structure that led to the rejection
of the revised proposal. We have made progress on these topics over the course
of the engagement so far, and we are hopeful that resolution will be reached
in the next seven days.

Under the extended deadline, BHP must either announce a firm intention to make
an offer for Anglo American in accordance with Rule 2.7 of the UK Code or
announce that it does not intend to make an offer for Anglo American, in which
case the announcement will be treated as a statement to which Rule 2.8 of the
UK Code applies, by no later than 5.00 p.m. (BST) on 29 May 2024 (the Revised
Deadline). The Revised Deadline can be extended with the consent of the Panel
in accordance with Rule 2.6(c) of the UK Code.

Structure of the proposal

Under the terms of the revised proposal, ordinary shareholders of Anglo
American would receive:

 ·   0.8860 BHP shares for each ordinary share they own in Anglo American
 (BHP Share Consideration), which represents Anglo American shareholders
 owning, in aggregate, approximately 17.8% of the combined BHP and Anglo
 American group on completion of the potential combination (the Final(1) Offer
 Ratio); and
 ·   ordinary shares in Anglo Platinum and Kumba (which would be
 distributed by Anglo American to its shareholders in direct proportion to each
 shareholder's effective interest in Anglo Platinum and Kumba).

The Final Offer Ratio represents a total value of £31.11 per Anglo American
share based on the closing share prices of BHP as at 22 May 2024 and Anglo
Platinum and Kumba as at 21 May 2024.

The Final Offer Ratio will not be increased, except that BHP reserves the right to increase and/or otherwise improve the Final Offer Ratio if (i) there is an announcement on or after the date of this announcement of an offer or possible offer (including a partial offer) for Anglo American by a third party offeror(s) or potential offeror(s) (whether identified or not), (ii) the Board of Anglo American announces that it recommends or is minded to recommend an offer on better terms than the Final Offer Ratio or (iii) the Takeover Panel otherwise provides its consent.

The combined group would have a leading portfolio of large, low-cost,
long-life Tier 1 assets focused on iron ore and metallurgical coal and future
facing commodities, including potash and copper. Anglo American's other high
quality businesses, including its diamond business, would be subject to a
strategic review post completion.

BHP is committed to a combination that leverages the best of both BHP and
Anglo American and intends to offer Anglo American up to two positions on the
Board of the combined entity.

BHP will work closely and constructively with competition regulators and
provide the information they need to assess the potential transaction. BHP is
confident that it can obtain all required regulatory approvals and consummate
a transaction that benefits customers globally.

The revised proposal is non-binding and subject to customary conditions
including completion of due diligence to the satisfaction of BHP. Anglo
American has been offered reciprocal due diligence on BHP.

Mike Henry, BHP Chief Executive Officer said:

"BHP has put forward a final offer ratio of 0.8860 BHP shares for each Anglo
American share. This is a significant increase from our first proposal and
would provide Anglo American shareholders with 17.8% of a combined BHP and
Anglo American.

The revised proposal is underpinned by BHP's disciplined approach to mergers
and acquisition and our focus on delivering long term fundamental value.

BHP's revised proposal will offer immediate value for Anglo American
shareholders and allow them to benefit from the long-term value generation of
the combined group.

BHP looks forward to engaging with the Board of Anglo American to explore this
unique and compelling opportunity to bring together two highly complementary,
world class businesses."

Value of the proposal

The terms of the proposal represent a total value, based on spot share prices
and FX rates(6) as at 22 May 2024 for BHP and 21 May 2024 for Anglo Platinum
and Kumba, of approximately £31.11 per Anglo American ordinary share
including £5.40 in Anglo Platinum shares, £4.23 in Kumba shares and £21.48
per share for Anglo American's unlisted assets, valuing Anglo American's share
capital at approximately £38.6 billion, and implying a:

 ·   47% premium on the aggregate £ value per Anglo American ordinary
 share over the undisturbed Anglo American share price (£21.11 as at 23 April
 2024, being the last trading day before the press speculation about the
 Initial Proposal);
 ·  premium on the undisturbed market value of Anglo American's unlisted
 assets of approximately 67% (in £ per share, as at 23 April 2024);

 ·  premium on the undisturbed market value of Anglo American's unlisted
 assets(3) of approximately 127% based on the volume weighted average closing
 price of Anglo American's shares (adjusted for the attributable volume
 weighted average closing prices of Anglo Platinum and Kumba) in the 90 trading
 days prior to and including 23 April 2024; and
 ·      56% premium to the broker median net asset value(4) of Anglo
 American's unlisted assets.

The revised proposal represents an increase in the spot aggregate £ value per
Anglo American ordinary share over the Second Proposal (as announced on 13 May
2024) of 11.3%. The terms of the revised proposal represent an increase over
the Initial Proposal:

 ·      of 24.8% in the merger exchange ratio(5) and BHP Share
 Consideration; and
 ·     20.4% in Anglo American shareholders' aggregate ownership in the
 enlarged group (i.e. increasing from c. 14.8% to c.17.8%).

The increase in the Final Offer Ratio reflects additional value from Anglo
American's restructuring proposal and cost plans. BHP believes that the Final
Offer Ratio represents a compelling opportunity for long term fundamental
value-creation for both Anglo American and BHP shareholders.

UK Takeover Code

Pursuant to Rule 2.5 of the Code, BHP reserves the right:

 ·      to make an offer on less favourable terms:
 ·      with the agreement or consent of the Anglo American Board; or
 ·      following the announcement by Anglo American of a Rule 9 waiver
 pursuant to the Code; or
 ·      if a third party announces a firm intention to make an offer for
 Anglo American at a lower price and/or on less favourable terms than
 contemplated under the terms of this proposed offer; or
 ·      if the number of Anglo American shares to be acquired includes
 any shares held by Tarl Investment Holdings Limited, Epoch Investment Holdings
 Limited, and/or Epoch Two Investment Holdings (together the "Tarl and Epoch
 shares"), or any of the Tarl and Epoch shares result in the issue of
 additional BHP shares as consideration or in connection with the offer; and/or
 ·      to implement the proposed offer by means of a takeover offer as
 opposed to a scheme of arrangement.

If Anglo American announces, declares, makes, or pays any dividend or any
other distribution or return of value to shareholders, Note 4 on Rule 2.5 of
the Code applies.

This announcement does not amount to a firm intention to make an offer and
there can be no certainty that an offer will be made. There is no certainty
that any form of agreement or transaction will be reached or concluded.

This announcement is being made by BHP without prior agreement or approval of
Anglo American.

 

Footnotes

1.   The Final Offer Ratio will not be increased, except that BHP reserves
the right to increase and/or otherwise improve the Final Offer Ratio if (i)
there is an announcement on or after the date of this announcement of an offer
or possible offer (including a partial offer) for Anglo American by a third
party offeror(s) or potential offeror(s) (whether identified or not), (ii) the
Board of Anglo American announces that it recommends or is minded to recommend
an offer on better terms than the Final Offer Ratio or (iii) the Takeover
Panel otherwise provides its consent.

2.   This release was made outside of the hours of operation of the ASX
markets announcement office.

3.   Anglo American's unlisted assets comprises the entirety of the value
implied for Anglo American's assets and liabilities excluding its
shareholdings in Anglo Platinum and Kumba based on Anglo American's closing
price less the closing prices of Anglo Platinum and Kumba on 23 April 2024,
being the last trading day prior to the press speculation about the Initial
Proposal.

4.   Net asset value is based upon a median of the six brokers which
disclose SOTP, including Anglo Platinum and Kumba, alongside latest reported
Anglo Platinum and Kumba net cash balances as of 31 December 2023.

5.   Based on 0.8860 BHP shares for each ordinary share. The number of fully
diluted Anglo American shares assumed excludes shares held by Tarl Investment
Holdings Limited, Epoch Investment Holdings Limited, and Epoch Two Investment
Holdings. These shares total 112,300,129 as per the Rule 2.9 announcement by
Anglo American dated 25 April 2024.

6.   Based on spot FX rates as at 21 May 2024 (AUD:GBP 0.5243; ZAR:GBP
0.0435).

Authorised for release by Stefanie Wilkinson, Group Company Secretary.

Important Notices

Barclays Bank PLC, acting through its Investment Bank (Barclays), which is
authorised by the Prudential Regulation Authority and regulated in the United
Kingdom by the Financial Conduct Authority and the Prudential Regulation
Authority, is acting exclusively for BHP and no one else in connection with
the subject matter of this announcement and will not be responsible to anyone
other than BHP for providing the protections afforded to clients of Barclays
nor for providing advice in relation to the subject matter of this
announcement.

UBS AG London Branch is authorised and regulated by the Financial Market
Supervisory Authority in Switzerland. It is authorised by the Prudential
Regulation Authority (the PRA) and subject to regulation by the FCA and
limited regulation by the PRA in the United Kingdom. UBS AG London Branch and
UBS AG Australia Branch (together, UBS) provided financial advice to BHP and
no one else in connection with the process or contents of this announcement.
In connection with such matters, UBS will not regard any other person as its
client, nor will it be responsible to any other person for providing the
protections afforded to its clients or for providing advice in relation to the
process, contents of this announcement or any other matter referred to herein.

Lazard & Co., Limited (Lazard), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting exclusively as
financial adviser to BHP and no one else in connection with the subject matter
of this announcement and will not be responsible to anyone other than BHP for
providing the protections afforded to clients of Lazard nor for providing
advice in relation to the subject matter or any other matters referred to in
this announcement. Neither Lazard nor any of its affiliates owes or accepts
any duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Lazard in connection with this announcement, any statement
contained herein or otherwise.

If BHP makes a statement to which Rule 2.8 of the Code applies, then except
with the consent of the UK Panel on Takeovers and Mergers, unless
circumstances occur that BHP specifies in its statement as being circumstances
in which the statement may be set aside, neither BHP, nor any person acting in
concert with BHP, nor any person who is subsequently acting in concert with
either of them, may within six months from the date of the statement:

 ·     announce an offer or possible offer for Anglo American (including
 a partial offer which would result in BHP and persons acting in concert with
 it being interested in shares carrying 30% or more of the voting rights of
 Anglo American);
 ·     acquire any interest of Anglo American if any such person would
 thereby become obliged under Rule 9 of the Code to make an offer;
 ·     acquire any interest in, or procure an irrevocable commitment in
 respect of, shares of Anglo American if the shares in which such person,
 together with any persons acting in concert with it, would be interested and
 the shares in respect of which it, or they, had acquired irrevocable
 commitments would in aggregate carry 30% or more of the voting rights of Anglo
 American;
 ·      make any statement which raises or confirms the possibility that
 an offer might be made for Anglo American;
 ·      take any steps in connection with a possible offer for Anglo
 American where knowledge of the possible offer might be extended outside those
 who need to know in BHP and its immediate advisers; or
 ·    purchase, agree to purchase, or make any statement which raises or
 confirms the possibility that it is interested in purchasing assets which are
 significant in relation to Anglo American.

Rule 9 waiver proposal and reverse takeover

A Rule 9 waiver proposal is where the Panel is asked to waive the obligation
to make an offer under Rule 9 of the UK Code which would otherwise arise
where, as a result of the issue of new securities as consideration for an
acquisition or a cash subscription or in fulfilment of obligations under an
agreement to underwrite the issue of new securities, a person or group of
persons acting in concert acquires an interest, or interests, in shares which
carry 30% or more of the voting rights of a company (to which the UK Code
applies).

A transaction will be a reverse takeover if an offeror (being a company to
which the UK Code applies) might as a result need to increase its existing
issued voting equity share capital by more than 100%.

Publication on a website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available at https://www.bhp.com (https://www.bhp.com) promptly and in any
event by no later than 12 noon (UK time) on the business day following this
announcement. The content of the website referred to in this announcement is
not incorporated into and does not form part of this announcement.

Rule 2.9 of the Code

In accordance with Rule 2.9(c) of the Code, BHP confirms that as at the date
of this announcement, it has in issue 5,071,530,817 ordinary shares. There are
no BHP Shares held in treasury. The International Securities Identification
Number (ISIN) of the shares is AU000000BHP4. BHP's Legal Entity Identifier is
WZE1WSENV6JSZFK0JC28.

BHP has a Level II sponsored ADR programme for which Citibank acts as
Depositary. One ADR represents two ordinary BHP shares. The BHP ADRs trade on
the New York Stock Exchange. The trading symbol for these securities is BHP,
the CUSIP number is 088606108 and the ISIN is US0886061086.

Disclosure requirements of the UK Takeover Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. You should contact the Panel's Market Surveillance Unit on
+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure.

 Contacts
 Media                                           Investor Relations

 media.relations@bhp.com                         investor.relations@bhp.com
 Australia and Asia                              Australia and Asia

 Gabrielle Notley                                John-Paul Santamaria

 +61 411 071 715                                  +61 499 006 018
 Europe, Middle East and Africa                  Europe, Middle East and Africa

 Neil Burrows                                    James Bell

 +44 7786 661 683                                +44 7961 636 432

 Americas                                        Americas

 Megan Hjulfors                                  Monica Nettleton

 +1 (403) 605-2314                               +1 (416) 518-6293

 Renata Fernandaz

 +56 9 8229 5357

 UBS (Joint Lead Financial Adviser to BHP)       +44 20 7567 8000 / +61 2 9324 3100

 David Roberts

 Sandip Dhillon

 Calvin O'Shaughnessy

 Campbell Stewart

 Barclays (Joint Lead Financial Adviser to BHP)  +44 20 7623 2323 / +27 (0) 10 0051303

 Philip Lindop

 Adrian Beidas

 Bruce Hart

 Akshay Majithia

 Lazard (Financial Adviser to BHP)               +44 20 7187 2000

 Cyrus Kapadia

 Spiro Youakim

 Gustavo Plenge

 BHP Group Limited

 ABN 49 004 028 07

 LEI WZE1WSENV6JSZFK0JC28

 Registered in Australia

 Level 18, 171 Collins Street

 Melbourne

 Victoria 3000 Australia

 Tel: +61 1300 55 4757 Fax: +61 3 9609 3015

 BHP Group is headquartered in Australia

 

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