BHP expected to make one more sweetened bid for Anglo American, analysts say (NYSE:BHP)

Shareholders expect BHP (NYSE:BHP) to return with a third and improved takeover proposal for Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY) before a regulatory deadline next week, Bloomberg reported Wednesday.

Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) has rejected two all-share approaches from BHP (BHP) that would require it to spin off listed South African businesses, and countering with a plan to exit diamonds, platinum and coal while focusing on copper and iron ore.

BHP (BHP) looks likely to make one final offer, given the lack of engagement from Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) board on the two prior approaches, Berenberg analysts say.

“Anglo’s proposal is… more palatable to some stakeholders than the BHP bid, but we see more risk for Anglo shareholders to see the strategy play out than take the money of an upped bid now,” Berenberg writes.

Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) breakup plan is “undoubtedly bold and shedding the equivalent of 39% of 2024 earnings would be transformational,” Wood Mackenzie’s James Whiteside says.

“However, execution risk is substantial and borne entirely by Anglo American shareholders… so if an increased offer from BHP did materialize, it could be seen as a more straightforward option for shareholders,” Whiteside says.

Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) plan is not superior to BHP’s (BHP) takeover offer, according to CreditSights analysts Wen Li and Michael O’Brien, who believe a BHP takeover is the more likely outcome.

One of the biggest problems with Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) plan is that its shareholders will shoulder the risks in a radical shakeup that is hastily assembled, CreditSights says.