De Beers parent company rejects takeover proposal

Anglo American, which is a majority shareholder in De Beers, which is involved in diamond mining in Namibia, has rejected a proposal from BHP Group to merge the two companies.

Anglo American owns 85% of De Beers, with the remaining 15% owned by the Botswana government.

In Namibia, De Beers has a 50/50% ownership engagement with the government in Namdeb, which is the country’s largest diamond-mining company.

About two weeks ago BHP Group made an unsolicited, non-binding and highly conditional proposal to combine the two companies.

The proposal comprised an all-share offer for Anglo American by BHP, with a requirement for Anglo American to complete two separate demergers of its entire shareholding in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American’s shareholders.

“The board has considered the proposal with its advisers and concluded that it significantly undervalues Anglo American and its future prospects,” a statement released by Anglo American reads.

According to the statement, the proposal was unattractive for its shareholders.

“The proposal contemplates a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal, and significant execution risks,” the statement reads.

The board therefore unanimously decided to reject the proposal.

The chairman of Anglo American, Stuart Chambers, says BHP’s proposal is opportunistic and fails to value the company’s prospects.

“… while significantly diluting the relative value upside participation of Anglo American’s shareholders relative to BHP’s shareholders. The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk,” he says.
Chambers says the company is positioned to create value from its portfolio of high-quality assets.

“Anglo American is well positioned to create significant value from its portfolio of high-quality assets that are well aligned with the energy transition and other major demand trends,” he says.

Chambers says the company’s shareholders have a chance to benefit from its growing value.

“With copper representing 30% of our total production, and with the benefit of well-sequenced and value-accretive growth options in copper and other structurally attractive products, the board believes shareholders stand to benefit from value appreciation as the full impact of those trends materialises,” he says.

He says Anglo American’s shareholders should take no action in relation to the possible offer.

“A further announcement will be made as and when appropriate. There can be no certainty that any firm offer will be made,” Chambers says.

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