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Anglo American shares rise to record close

Anglo American shares initially fell but later rose to close higher on Tuesday after the embattled miner laid out its response to BHP’s (ASX:BHP) two spurned takeover offers.

Anglo shares dipped more than 3%, valuing it at around $US35 billion, well under the mooted BHP second offer price of $US41 billion. However, they rebounded to be up 1.8% at one stage before a late easing saw them close with a gain of 0.7% for the session.

It seems big investors like the company’s plans to finally shake itself up, even if it took two offers from BHP to do so.

Now the pressure is on BHP to move forward with a formal offer—it has until May 22 to do so or be banned from making an offer for six months.

Anglo’s proposals for a complete makeover seem familiar in light of what BHP wants to do to the company, and Anglo CEO Duncan Wanblad confessed on an investor call that the makeover had been forced on the company by BHP’s offers.

It is clear Anglo American wanted to delay the remake until after the May 29 elections in South Africa, but BHP’s offers and the Anglo makeover have turned a business deal into a very big political issue with a fortnight to go in the poll campaign.

While Anglo was already working on its own review of its assets, including the platinum and diamonds businesses, the timeline for the plan had to be sped up after BHP’s approach, the world’s No. 1, Anglo’s CEO told the briefing.

“The only thing that the BHP approach did is that it forced the timeline on work that we were already doing,” Wanblad said on a conference call after Tuesday’s announcement. “This is an acceleration of a strategy process that we were already executing. I have to say that I would probably not have announced it at this particular point in time,” Reuters reported.

As a condition for its bid, BHP had requested that Anglo get rid of its platinum and iron ore units in South Africa.

After rebuffing two proposals from BHP, which Anglo said undervalued the company and were too complicated to execute, it revealed (only hours after BHP’s second approach was rejected) the potential break-up of the company by demerging or selling its steelmaking coal, nickel, diamonds, and platinum businesses.

As part of the plan, Anglo said it was exploring the spin-off of its troubled platinum unit, Johannesburg-listed Amplats, sending its shares down more than 8% in trading on Tuesday.

Shares in Anglo’s listed unit Kumba Iron Ore were up around 3% because Anglo wants to keep it and the Brazilian iron ore mining and export business.

“We already have been receiving strong inbound interest,” Wanblad told reporters about selling its steelmaking coal mines, diamond, and platinum businesses.

The company owns coal mines in Queensland’s Bowen Basin (BHP would be a logical buyer of the five mines and inject them into its BMA joint venture with Mitsubishi).

“Today we’re announcing a clear, compelling, and decisive plan to unlock significant value from this portfolio and accelerate delivery against our strategic priorities of operational excellence, simplification, and growth,” Wanblad said.

BHP shares eased 0.23% on the ASX, but ADRs in New York were up 2.96%.