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BHP Group's two biggest rivals are currently waiting on the sidelines to see what happens with their bid for Anglo American.
Both Rio Tinto Group and Glencore are focused on waiting for opportunities to buy specific parts of Anglo's business as the BHP bid unfolds, rather than pursuing rival offers for the group as a whole. There is.
The situation remains fluid and could change at any time, people familiar with the ongoing discussions within the industry said on condition of anonymity.
A Rio Tinto representative declined to comment, while a Glencore spokesperson said the company does not comment on market rumors or speculation.
BHP's proposal to break up and then buy Anglo comes as bankers furiously pitch the deal while other big producers consider whether to make bids with rivals. This is causing a shock to the entire industry.
The mining industry has a history of frenzied periods of M&A, characterized by bidding wars, hostile takeovers, and fear of missing out. All major mining companies are currently keen to expand into copper, which is a key driver of BHP's Anglo bid.
But any deal for Anglo is likely to be complicated by the company's unique mix of structure and products, and rivals will be wary of doing business with giant BHP. The industry must also contend with its recent past. Rio Tinto in particular has spent much of the past decade placating investors after a series of disastrous deals and other failures.
Anglo rejected the initial offer, and Bloomberg reported last week that BHP was considering improvements.
Rio and Glencore are seen by many analysts as the most likely to invade Anglo.
Notably, Rio is the only producer with a balance sheet and cash flow on par with industry leaders. Like BHP, the world's second-largest miner faces structural challenges with too much iron ore in its portfolio and not enough copper. Meanwhile, Glencore is one of the most active dealmakers in the sector.
But Rio executives have discussed Anglo's situation multiple times and held talks with its banks, but they are not feeling any pressure to make a takeover bid at this point, according to people familiar with the situation.
They warned that no firm decisions had been made and the situation could change at any time.
Officials say Rio faces many of the same obstacles BHP faced. While Anglo's copper mines are attractive, many of its other businesses are underperforming or may not fit into its portfolio.
BHP's solution was to first offer to spin off its holdings in two South African listed companies before Anglo went ahead with the acquisition, but Anglo said the plan was “very unattractive” to shareholders. “No,” he refused.
However, Rio is closely monitoring whether BHP's approach succeeds in freeing Anglo's copper assets from its remaining operations, or forces Anglo to restructure its copper business in a way that makes it an easier target. , officials said.
For example, Rio has long praised Anglo's giant Collahuasi copper mine in Chile, and Bloomberg previously reported that it made offers to both Anglo and co-owner Glencore for a stake in the mine during the 2015 commodity downturn. It was reported that.
Glencore, one of the industry's most active dealmakers, is also keeping an eye on whether certain Anglo assets will be put up for sale as a result of the deal.
BHP said if the deal was successful, some of Anglo's businesses would be subject to review and it could be forced to sell the mine to obtain antitrust approval. Anglo itself had already undertaken a review of its business as part of a turnaround plan before the BHP stake was made public.
In addition to Anglo's copper assets, Glencore could also be interested in acquiring Anglo's iron ore unit in South Africa and its steelmaking and coal operations in Australia, some of the people said. Glencore last year made a bid to buy Teck Resources, which ultimately fell through, but ultimately agreed to buy the Canadian company's coal division instead. The transaction is expected to close in the coming months. The biggest miners are constantly evaluating their rivals, a process that has accelerated since BHP's approach became public.
Investment bankers, who have not yet been hired by Anglo and BHP to advise on the deal, are actively working with other major mining companies, including Freeport-McMoRan and Vale, as well as Japanese trading houses and government-backed investors in the Middle East. The company is promoting the possibility of trading.
And while BHP's biggest rivals are in no hurry to jump in, there is a clear sense of what a successful Anglo acquisition would mean. Already the largest mining company, BHP's size will dwarf its peers, but the addition of Anglo Copper to its own copper mines and hugely profitable iron ore assets will make it one of the most attractive. It will become part of the product portfolio.
Management and advisors are also considering the impact on deals in other areas of the industry. If the biggest, best-funded companies spend months or years on Anglo, that leaves competitors with a clear path to other potential targets such as First Quantum Minerals and Teck. there is a possibility.
Rio has considered potential deals in the past, including with copper miner First Quantum, but CEO Jakob Stausholm has so far rejected the idea. However, Bloomberg reported last month that Rio was one of the potential bidders for a stake in First Quantum's African copper operations. The Canada-based mining company is looking to raise cash to shore up its balance sheet after its flagship mine in Panama was forced to close.
