Anglo American to Break Up Business After Rejecting BHP Bid

British mining giant Anglo American has made a bold move in response to a £34bn bid from rival BHP, announcing plans to break up the business in order to focus on key sectors and deliver value to investors.

The company revealed that it will sell or demerge major parts of the firm, including its De Beers diamond operation, Anglo American Platinum, and its steelmaking coal businesses. This strategic decision will allow Anglo American to streamline its operations and concentrate on its copper, iron ore, and crop nutrients businesses.

Chief executive Duncan Wanblad emphasized the importance of creating a simpler business structure that will drive operational performance and cost reduction. The company expects this restructuring to result in sustainable incremental value creation and position it to benefit from the global shift to clean energy.

In addition to enhancing its competitive position in the market, Anglo American anticipates that the reshaping of the firm will lead to a significant reduction in costs, amounting to $1.7bn (£1.35bn).

The move comes after Anglo American rejected an increased takeover offer from BHP, citing that it significantly undervalued the company and was not in the best interest of its shareholders. BHP’s interest in acquiring Anglo American is primarily driven by its copper operations, which are crucial for conducting electricity and are in high demand as economies transition to renewable energy and electric vehicles.

While the potential merger of the two mining giants could have created a powerful player in the industry, it would have faced substantial competition hurdles. Anglo American’s ownership of copper mines in Chile and Peru, where BHP also operates, further complicates the proposed deal.

As Anglo American charts a new course with its business breakup, the mining industry awaits further developments and the impact of this strategic shift on the global market.