On Wednesday, BHP Group (NYSE:BHP) announced it needs more time to finalize its $50 billion takeover bid for Anglo American (OTCQX:AAUKF), requesting an extension beyond today's 4 PM GMT deadline.
The Australian miner has already been granted a one-week extension from its original May 22 deadline after its third offer failed to materialize.
Per Reuters' report, BHP sent a statement to the Australian Securities Exchange (ASX), expressing the need for additional time to engage with Anglo American, citing the deal's complex structure.
The company also indicated its willingness to offer a break fee if the merger is blocked due to antitrust or regulatory reasons, stating it had quantified and managed such risks.
"Today's announcement says to me that BHP are doing all they can to placate any concerns Anglo's board could have from a South Africa jobs and regulatory point of view," said Hayden Bairstow, Head of Research at broker Argonaut in Perth.
"This is them saying, ‘Can we just extend this for another week, and lock it all up?' and I think that is what will happen."
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If Anglo American does not agree to the extension, BHP will have to either walk away from the deal or wait six months to make another approach unless a rival bidder emerges. BHP's stock closed flat on the ASX today.
Disputes over South African assets have been a significant sticking point in negotiations, owing to local ownership stakes and employment security concerns. As of Q1 2024, unemployment in this African country was 32.9%.
JPMorgan estimates that capital outflows from South Africa could be around $4.5 billion under the proposed buyout structure. BHP has made socio-economic commitments to South Africa, including maintaining current employment levels at Anglo's Johannesburg office and sharing costs related to increased employee ownership.
Key Anglo shareholders, including BlackRock, Ninety One, and Sanlam Investments, have supported extending the talks in recent weeks, highlighting their interest in seeing a mutually beneficial resolution.
This backing could play a crucial role in the ongoing negotiations as BHP seeks more time to finalize the details of the proposed merger.
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Price Action: BHP shares are up 2.10% at $60.85 premarket at the last check on Wednesday.
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