BHP has done it again. Eighteen months after quitting a set-piece M&A battle for Anglo American with its tail between its legs, the $132 billion miner was on Sunday evening obliged to repeat the move in double-quick time. If CEO Mike Henry leaves his role next year, as per media reports, this represents a decidedly dud swan song.

Given what happened in May 2024, it might seem surprising that Henry took a second bite at Anglo. Back then, his $47 billion offer was based on the valid call that the London-listed group would help iron ore-heavy BHP secure greater exposure to energy transition metals like copper. But he misread his target’s openness to a deal and Anglo’s willingness to hive off South African assets to make it happen. In the year and a half since, moves in the Australian dollar and in both companies’ share prices have also made it harder for BHP to make the acquisition stack up.

All that said, there was logic to Henry bidding again. Anglo’s impending $54 billion tie-up with Canada’s Teck Resources, announced in September, will, if approved by shareholders next month, create a major new transition metals rival. Gatecrashing that is highly tempting. The $1.4 billion overall EBITDA boost from combining the merging pair’s Chilean copper mines could arguably have been delivered by BHP buying Anglo and then striking a joint venture with Teck. Since last year, Anglo has also slimmed down, removing some of the impediments to a BHP acquisition. And the Anglo-Teck deal was structured without a premium, giving Henry scope to offer one.

His call in May 2024 to walk away rather than overpay bought him plaudits from investors as well as criticism. But having seemingly misread that situation, he needed to be hypersensitive to the fact that Anglo shareholders demonstrably like their Teck deal: the company’s shares are up by nearly a fifth since September and trade at 7.7 times 2025 expected EBITDA, using Visible Alpha data, while BHP lags at 5.6 times. That meant any bid needed to dangle a meaningful premium on top of where the shares trade now.

It’s not yet clear what Henry put on the table this time, but it’s pretty obvious it wasn’t enough. Any reticence on his part would have been understandable: Breakingviews calculates that a proposal offering a 30% premium to Anglo’s valuation on Friday would have made a 7% return on invested capital, using Visible Alpha-compiled estimates of $6.7 billion for Anglo’s operating profit in 2030 and $800 million of cost savings from the combination, taxed at 39%. That would have lagged Anglo’s 9% cost of capital as estimated by Morningstar analysts.

Still, any pleasure BHP investors take in avoiding overpaying will be offset by the impression it has made the same mistake twice. In his almost six years in charge, Henry has failed to bag a big M&A prize. Assuming he steps down as boss in mid-2026, that looks likely to be part of his legacy.

BHP said on November 23 that it was no longer pursuing a potential deal with Anglo American after preliminary discussions with the rival miner’s board.

“Whilst BHP continues to believe that a combination with Anglo American would have had strong strategic merits and created significant value for all stakeholders, BHP is confident in the highly compelling potential of its own organic growth strategy,” BHP said.

BHP had made a renewed takeover approach to Anglo, Reuters reported earlier on November 23, citing a source familiar with the matter, just months after the London-listed miner agreed to a nil-premium, all-share combination with Canada’s Teck Resources.

Anglo American declined to comment.

Anglo and Teck shareholders vote on their combination on December 9.

BHP’s offer was understood to be partly in cash and partly in its shares, the Financial Times reported, citing people familiar with the matter.
Source: Reuters