Anglo American Gives BHP the Blueprint for a Takeover

In trying to mount a defense against takeover interest, Anglo American Plc has also given its much larger rival BHP Group Ltd. a blueprint on how to launch a successful bid.

If it wants the prize, BHP needs to sweeten its offer and fine-tune its initial proposal. But the game is up: Either Anglo will break up itself to remain independent, or, after just over 100 years of operation, it will be taken over. The status quo won’t hold.

On Tuesday, Anglo, which is listed in London, made a last-ditch attempt to fend off its rival, announcing its biggest shakeup in a quarter a of century. The company told investors it’s exiting diamond, platinum, nickel and steelmaking mining. Plus, the restructuring will all but shelve construction of a cash-guzzling fertilizer mine in the UK for at least two years, if not forever. By 2030, all the company’s underlying earnings will come just from copper and iron ore. “We are reshaping quite radically,” Chief Executive Officer Duncan Wanblad said.

The plan is indeed radical — but it mirrors the outlines of what BHP has proposed already, a structure Anglo has flatly rejected. Granted, there are differences about which assets go or stay, the complexity and costs and who bears the risk of the overhaul . The version presented by Wanblad also better navigates South Africa’s politically charged environment, retaining significant assets in the country.

Fundamentally, however, Anglo has conceded — even if it strongly denies it — that most of the big-picture strategy that BHP has tabled makes sense. Amid a takeover battle, accepting the enemy’s mapping speaks volumes about your own weaknesses — even if, as Wanblad said, one insists that the strategies are “completely different in terms of time and complexity.” Both are important, but substance is even more crucial.

Wanblad is right to emphasize that his road map is is less risky for shareholders because it needs fewer regulatory approvals. Under the BHP proposal, they bear all the risk — and that equates money. But Wanblad left his investors in the dark on other important details: He had no answers on the tax cost of the divestiture of its platinum business and was mum when asked about likely writedowns on its fertilizer business. Details about cost savings were missing too, and the debt targets merely repeated what was previously announced .

Wanblad also didn’t sound very reassuring when pushed about anticipated difficulties, saying management was “reasonably confident” it can deliver on the plan, but warned that “it is going to take in the order of 18-24 months.” Anglo American shares dropped almost 3%.