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Anglo agrees $53 bln tie-up with Teck after spurning BHP

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Investors see BHP focused on building out own copper

growth

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Bankers say much could change before deal closes

By Melanie Burton

MELBOURNE, Sept 10 (Reuters) - Top global miner BHP's

focus on expanding its own copper assets while it undergoes

leadership change means it is unlikely to gatecrash the planned

$53 billion tie-up of Anglo American and Teck Resources ( TECK ),

investors and bankers said on Wednesday.

London-listed Anglo American and Canada's Teck

Resources ( TECK ) announced a merger on Tuesday, marking the

sector's second-biggest tie-up ever, to forge a new global

copper-focused heavyweight.

The deal came just over a year after BHP scrapped a $49

billion bid for Anglo that in one mega acquisition would have

beefed up the Australian miner's holding in the metal seen as

essential to the energy transition.

After being rebuffed by Anglo three times, BHP opted instead

to double down on a series of smaller projects where it sees

better value, a strategy that investors said has been consistent

and suggests it is unlikely to make a move on Anglo or Teck.

"Given BHP's message, 'We have moved on,' any move by BHP

for either of the companies would come as a surprise," said Andy

Forster, a portfolio manager at Argo Investments in Sydney,

which holds BHP shares.

In the past year, BHP instead spent $2 billion for a stake

with Canada's Lundin in two Argentinian copper

projects, including the Josemaria mine whose life was last month

extended by six years. It has also pushed hard to eke out

production gains at top copper mine Escondida in Chile.

BHP declined to comment on whether it might spoil the

Anglo-Teck deal but pointed Reuters to recent comments by its

chief executive saying that M&A was just one lever of many for

growth.

"Frankly in current markets, it's hard to see the right

combination of the commodities that we like, the asset quality

that we like, at a price where we can still unlock attractive

value for BHP shareholders," CEO Mike Henry said on a results

call in August.

Despite its recent failure to offload its Australian coal

assets, Anglo has worked hard to improve its share price from a

year ago, one M&A banker said.

"Both miners are in play now. Anglo's share price is up,

they could probably put in a good defence like they did last

time," he said. Shares in Anglo have jumped 20% since before

BHP's bid in late April while BHP shares have dropped 8%.

The deal was smart in that several factors were favourable

to Canada in a way that would be difficult to replicate for

other majors who might want to buy Teck, such as relocating the

new company's headquarters to Canada, two people said.

Among the conditions for approving BHP's merger with South

Africa's Billiton in 2001, the Australian government mandated

that the holding company be headquartered in Australia.

Succession may be another stumbling block. BHP Chair Ross

McEwan replaced Ken MacKenzie in March, after the latter's

decade at the wheel, while CEO Henry is more than five years

into a typical six-year term, meaning that BHP may be focused

for now on replacing him rather than on big ticket M&A.

But bankers aren't ruling out the possibility of BHP

swooping in down the track, especially if the deal doesn't go to

plan.

"You'd have to have a serious think about it - the two most

obvious targets in a nil premium deal," said an M&A banker not

directly involved in the deal, which the parties expect to take

12 to 18 months to complete.

"They have got time ... A deal doesn't have to be done

tomorrow."