After the Bell: Anglo’s chance to turn itself into the corporate bride from hell

If you are Anglo American now, courted as you are by the world’s largest mining company, BHP, what on earth do you do? It’s funny how often romance analogies are used in the process of corporate acquisitions, even as there is not the slightest iota of romance about this. For one thing, a bunch of highly paid Anglo managers are likely to be out on the street if the deal goes through. Spare a thought for Anglo’s fairly newly installed CEO Duncan Wanblad, who has just got his feet under the desk. 

In some ways, however, the comparison does work, because we talk about a marriage, a dowry and possibly even an examination of the undergarments (or at least peeping under the bonnet), and, in certain circumstances, rival affection. Just by the way, think for a moment about that “dowry”. As lobola goes, it’s pretty impressive. And as anyone who has worked for South African Breweries can tell you, there comes a point where it’s just ridiculous to say “no”.

Let’s assume that Anglo wants to retain its independence, which we can, since on Friday it gave the first indication that it does by formally rejecting BHP’s R730-billion offer. So, for the time being, the answer remains “no”.

The first question is: Why would we want Anglo to say “no”? I think the answer to that is simple: Anglo means something to the African continent. For all his other issues — and there are many — SA’s mines minister, Gwede Mantashe, nails it in a single swipe, as politicians often do. His response to the BHP bid was that the Australian company “never did much for South Africa”. 

But here is the problem: for his part, Mantashe never did much for Anglo, and I’m willing to bet that all the politicians who have castigated Anglo for years will miss the company when it’s gone. All the big mining houses distrust Africa, particularly South Africa, because they worry about forced sales, nationalisation, poor administration, terrible transport and all that stuff.  

For all its faults, Anglo is born of African soil and has tried to be at least partly loyal to the continent. For Africa, Anglo’s departure would mean being thrown to the tender mercies of the Chinese or, worse, the Russians. Big mines will not get built, even in places where they should, like Botswana and possibly Kenya and Tanzania.

Even the quasi-governmental control over Anglo, through the Public Investment Corporation, is now pretty small — about 7%. It is not even the biggest shareholder any more; the US giant BlackRock is, and third in line is Vanguard. The company is not called Anglo American for nothing.    

And there is the other problem: there is nothing Mantashe can do about it. Anglo is a British company now; the takeover is a matter for British law and largely British shareholders. BHP’s plan to require the disposal of Kumba and Amplats, very deliberately, takes the South African government out of it. Even if the Competition Commission could object, what local competitive issue would they be objecting to?  

It’s also worth noting what Anglo is up against if it wants to fight: it’s facing an adversary four times its size, with a better long-term track record, whose share price is riding very high. 

The first volley