Anglo American rebuffed a $39-billion takeover proposal from BHP Group ( BHP ) , dismissing the offer as "highly unattractive."

What Happened: BHP’s bid, announced Thursday, April 25, involved an all-share offer. One of the conditions requires Anglo American to complete two separate demergers of its shareholdings in Anglo American Platinum (Amplats) and Kumba Iron Ore (Kumba).

The Anglo American board of directors unanimously rejected BHP’s bid, arguing it undervalues the company’s prospects.

"The BHP proposal is opportunistic and fails to value Anglo American's prospects while significantly diluting the relative value upside participation of Anglo American's shareholders relative to BHP's shareholders,” stated Anglo board chairman Stuart Chambers.

“The proposed structure is also highly unattractive,” he added, citing “substantial uncertainty and execution risk” among shareholders and stakeholders.

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BHP framed the offer as a 31% premium to Anglo American’s latest market price. However, Anglo American contends that the proposal fails to capture the value of its portfolio, particularly significant holdings in copper.

"Anglo American is well positioned to create significant value from its portfolio of high-quality assets that are well aligned with the energy transition and other major demand trends," Chambers said, noting the copper's presence in 30% of the company's production.

Copper is a critical metal driving the global energy transition. Anglo American possesses ownership interests in four of the world’s largest copper mines:

Collahuasi (44%)

Los Bronces (50.1%)

El Soldado (50.1%)

Quellaveco (60%).

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Why It Matters: The proposed merger has the potential to be the biggest shakeup in the global mining industry in over a decade.

However, as reported by The Financial Times, Berenberg’s Richard Hatch was unconvinced that Anglo American presents significant turnaround opportunities for BHP, quoting limited operational synergies.

Legal & General Investment Management, one of Anglo’s largest shareholders, also weighed in.

BHP’s approach “highly opportunistic” and “unattractive,” the asset manager said. The proposed exchange ratio undervalues Anglo American and further industry consolidation will not accelerate investment as needed, the firm argued.

What’s Next: Under the UK Takeover Code, BHP has until 5 p.m. on May 22 to respond by announcing a firm intention to make an offer for Anglo or to withdraw its bid entirely.

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