Iron ore mining in Western Australia.
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Mining giant Anglo American on Friday rejected a takeover bid from rival BHP Group, saying the bid “significantly undervalues” the company and its future prospects.
Australia-based BHP said on Thursday it had made an all-share takeover offer, valuing the smaller company at £31.1 billion ($38.9 billion). According to a Reuters analysis, the takeover would create the largest mining company in the world.
Shares of Anglo American were down 0.5% at 9am London time, while other mining stocks rose.
In a statement, the British miner said board members had unanimously rejected BHP’s “unsolicited, non-binding and highly conditional” proposal.
Anglo-American chairman Stuart Chambers dismissed the offer as ‘opportunistic’.
“BHP’s proposal is opportunistic and fails to value Anglo American’s prospects, while significantly diluting the relative value of the upside holdings of Anglo American shareholders versus BHP shareholders,” he said.
BHP did not immediately respond to a CNBC request for comment.
The offer included a requirement for Anglo American to spin off its entire equity interests in South Africa-based Anglo American Platinum Limited and Kumba Iron Ore Limited, two entities that together account for a significant portion of the company’s copper production.
Anglo American chairman Stuart Chambers said the proposed restructuring was “highly unattractive as it created significant uncertainty and execution risks borne almost entirely by Anglo American, its shareholders and other stakeholders.”
Shares of Anglo American Platinum rose more than 2% after the announcement, while Kumba Iron Ore fell 0.9%.
Mining companies are looking to boost copper supplies in the coming years due to expected shortages and the metal’s key role in the energy transition, with use in electric vehicles, electricity grids and wind turbines.
Chambers said that in its current state, Anglo American was “well positioned” to benefit from that energy transition.
“With copper representing 30% of Anglo American’s total production, and with the benefit of well-ordered and value-adding growth opportunities in copper and other structurally attractive products, the Board believes that Anglo American shareholders will benefit from what we expect significant appreciation as the full impact of these trends materializes,” he said.
— CNBC’s Jenni Reid contributed to this article.