BHP walks away from latest takeover approach for mining rival Anglo – business live

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European defence company shares and gas prices fall after US and Ukraine discuss peace plan

European defence company stocks have dropped at the start of trading, and wholesale gas price are down too, after officials from Washington and Kyiv held weekend talks in Geneva over how to end the Ukraine-Russia war.

Last night, the US and Ukraine said they had created an “updated and refined peace framework” to end the war with Russia, after a row over an original US-backed document that included many of Moscow’s demands.

The US secretary of state, Marco Rubio, said he was “very optimistic” about the progress of the talks in Switzerland.

Rubio told reporters:

“I think we made a tremendous amount of progress.

We’ve really moved forward, so I feel very optimistic that we’re going to get there in a very reasonable period of time, very soon.”

Ukraine’s European allies published their own Kyiv-friendly plan on Sunday. It says negotiations over territory should take place after a ceasefire is agreed and should start from the line of contact – the existing frontline.

The war continued over the weekend, though, with a Russian drone strike on the major Ukrainian city of Kharkiv killing four people and wounding 17 on Sunday.

Hopes that the Geneva talks could lead to a breakthough to end the talks knocked German defence firm Rheinmettal down by 3.5% at the start of trading.

Renk, which makes propulsion and drivetrain components for military vehicles, are down over 4%.

In London, defence contractor Babcock’s shares have dropped by 1.4%, while BAE Systems dipped 1% at the open.

Seperately, Bloomberg reports that European natural gas prices have hit an 18 month low today.

They say:

European natural gas dropped below €30 a megawatt-hour for the first time in more than a year amid discussions about a potential end to Russia’s war in Ukraine.

Benchmark futures hit the lowest levels since May 2024. They had been trading in a narrow band for weeks as traders weighed the region’s ample supplies against frequently shifting weather forecasts, assessing whether there’ll be enough gas to get through winter.

Anglo shares drop

Shares in Anglo American have dropped by around 1% in early trading, as City investors react to BHP’s decision to initiate merger talks, and then walk away.

The situation doesn’t seem to disrupt Anglo’s existing plans to merge with Canadian rival Teck Resources.

But perhaps there was a lingering hope that the Teck deal might have flushed out a bidder.

As my colleague Nils Pratley wrote, astutely, in September:

The structure… looks like an open invitation to bigger rivals to bid for either Anglo and Teck, both of whom have seen off wannabe buyers in recent years.

Kaan Peker, analyst with RBC in Sydney, has said (via CNBC) that BHP’s latest approach for Anglo looks ‘a little messy’:

“There’s probably a handful of times when assets like this are up for sale, so BHP may as well assess if the option is open. But it does look a little messy from the BHP side.

BHP’s second failed approach for Anglo American does not suggest fears about the global economic outlook, argues Kathleen Brooks, research director at XTB, who says:

There was also M&A news over the weekend. BHP made another offer for FTSE 100 miner Anglo American.

The UK company is already in a $50bn merger with Teck Resources, which was designed, in part, to rebuff takeover attempts. BHP has now said that it has walked away from the deal, however, if there was deep concern about the global economy, or the potential for a deep stock market crash, then it would be unlikely to see any takeover attempts, rebuffed or not, in the resources sector.

One banker has told the Financial Times that it is a surprise that BHP had returned to the fray only to give up its chase for Anglo so quickly, saying:

“I thought they’d come back and finish it. To come back and not to finish it is quite amazing.”

Introduction: BHP walks away from fresh Anglo American tie-up

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

A mega-merger deal in the mining sector has briefly burst back into life, before being dampened down.

Last night, news broke that mining group BHP had made a new takeover approach to Anglo American, over a year after its previous wooing was rejected. This fresh burst of enthusiasm threatened to disrupt Anglo’s plans to merge with Canadian rival Teck Resources, to create a £39bn global copper group, which has yet to be approved by shareholders.

BHP, it was reported, was proposing a deal based on a mix of cash and stock to Anglo.

But BHP’s new overtures appear to have been batted aside by Anglo, as it has now told shareholders:

“Following preliminary discussions with the board of Anglo American, BHP confirms that it is no longer considering a combination of the two companies.”

BHP insists that a deal would make sense, before then arguing that it can cope fine with Anglo, saying:

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.

Under City rules, BHP is now blocked from bidding for Anglo for six months, unless there is a change in circumstances.

Back in 2024, BHP made three failed attempted to agree a merger with Anglo, before declaring in October that it had ‘moved on’.

Given last year’s rebuttal, and Anglo’s subsequent tie-up with Teck, BHP’s move is a little surprising.

As portfolio manager Andy Forster at Argo Investments in Sydney put it:

It’s a last throw of the dice for BHP.

I’m a bit surprised that, given the relative performance that they thought they’re in a position to come back and do another deal and extract value for shareholders.”