BHP Group decided against making a firm offer for Anglo American Plc, instead walking away for now from what would have been the biggest mining deal in over a decade.

The May 29 announcement, which came less than one hour before a 5 p.m. UK deadline, marked an abrupt end to the five-week public battle between two of mining’s biggest names. It will ratchet up the pressure on Anglo CEO Duncan Wanblad to deliver on an ambitious turnaround plan, while his counterpart at BHP may have to look elsewhere for the copper growth that Anglo would have provided. 

Anglo has repeatedly rebuffed proposals from BHP to partly break up and then acquire the 107-year-old company, but on May 22 agreed to extend the cutoff to allow for talks. The two sides were unable to agree on BHP’s complicated $49 billion deal structure and Anglo said earlier on May 29 that it saw no reason for another delay despite a last-minute appeal from BHP.

A successful takeover would have created a commodities powerhouse that towered over its closest rivals, significantly increasing BHP’s copper production at a time when miners and their investors are positioning for a prolonged period of tight metal supply and rising prices.

The pressure is now on CEO Wanblad to show that Anglo can generate more value for shareholders as a standalone company, after unveiling a radical plan to overhaul the business earlier this month. Analysts and investors have also suggested that BHP or another rival could still target Anglo in the future, particularly if the company succeeds in exiting some of its less attractive businesses. UK takeover rules require BHP to stay away for six months unless Anglo receives a rival bid. 

Anglo’s shares fell 3.1% on May 29 but remain well above the levels seen before Bloomberg first reported the takeover interest. Prices for key commodities including copper and iron ore have rallied over the same period. 

BHP first approached Anglo with a proposal in mid-April for the smaller company to spin off its majority stakes in two listed South African miners before an all-share acquisition of the rest of the group (GM April 26, p. 1). Anglo rejected the offer and instead rushed out a plan to overhaul its business by exiting diamonds, platinum, and coal, while slowing spending on a massive UK fertilizer project (GM May 17, p. 1).

Anglo has long been viewed as a potential target because of its lucrative copper mines, but the company’s complicated structure and unusual mix of niche commodities have largely kept suitors away. A series of setbacks sent its share price plunging late last year, leaving the company vulnerable to BHP and its CEO Mike Henry, who has been seeking a big deal to grow in copper.

But while BHP has twice increased the number of shares it was willing to pay for Anglo, Henry held firm in insisting on the spinoffs and refrained from adding a cash element to the deal.

Anglo’s objections to BHP’s proposal have centered on South Africa, which is home to some of Anglo’s biggest operations, employing tens of thousands of people, and the company has deep political and social ties to the country.

Anglo was concerned that BHP’s demand that it first exit Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. could leave the newly independent Johannesburg-listed companies to carry the cost of any concessions imposed by South Africa, reducing their value and ultimately penalizing the current Anglo investors who would receive the shares in the spinoffs.

The multistep deal would require several layers of approval in South Africa, where deals are subjected to “public interest” assessment and authorities have a record of extracting substantial concessions from companies.

BHP argued that Anglo should extend the deadline for a second time and offered to discuss a breakup fee if the deal didn’t receive regulatory approvals, but the smaller company’s board said it didn’t see any reason to do so given the continued gulf between their two positions.

Anglo CEO Wanblad must now make good on a dramatic turnaround plan while under the scrutiny of predatory rivals, as well as shareholders who have just watched a 39% takeover premium walk out the door.

“I don’t want anything to get in the way of getting this done,” Wanblad said on May 30. “We want to demonstrate early progress, and continuous progress. It will get done.”

He has promised to save Anglo by breaking it apart, with an ambitious plan to exit platinum and coal, and either sell or spin off the De Beers diamond business. Perhaps the most controversial element in Wanblad’s plan is a decision to keep a giant fertilizer mine that Anglo is building in the UK, although he has slowed spending on the site (GM May 17, p. 1).

The Woodsmith fertilizer project, which would have cost $9 billion in total, is unpopular with many investors due to uncertainties about the market and the amount of capital it has sucked from the business. The company wants to bring in a partner to lower its share of the bills and risk. The project is currently still three years away from first production in 2027.

At the same time, Wanblad’s decision to indefinitely halt the fertilizer project has brought the ire of local UK politicians fearful of losing some 1,650 jobs.

So far, investors appear to be backing the Anglo CEO. Shares have barely reacted to BHP’s walking away and remain well above the levels seen before the bid became public.