Anglo American will divest or demerge De Beers as part of its strategy to accelerate growth amid takeover bids from BHP Group.

On May 14, Anglo American said it had rejected a second takeover offer of 34 billion pounds (US$42.47 billion) made by BHP on May 7, which is 15 per cent higher than the Australian miner’s initial offer on April 24. 

According to Anglo American, aside from undervaluing the company, the offer continues to require the demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited, a structure that is “highly unattractive” to its shareholders.

Anglo American said it is confident in its standalone future prospects and is now accelerating its growth strategy, which includes divesting or demerging the De Beers business to improve strategic flexibility for both companies.

Diamond unit 

In a statement on May 14, De Beers Group CEO Al Cook expressed confidence in the future of the diamond business, citing the ongoing recovery in rough diamond demand and the positive outlook for the sector. 

He said, “Today’s announcement from Anglo American opens up new possibilities under new ownership. But some things will not change. We will continue to deliver value for all our stakeholders, including our partners in Botswana, South Africa, Namibia, Canada, Angola and other countries.”

The group was also looking forward to finalising its transformational agreement with the government of Botswana, which holds a 15 per cent ownership interest in De Beers, he added.

According to Cook, De Beers will be presenting its new strategy later this month. 

Restructure 

Aside from De Beers, Anglo American also intends to divest of its interests in steelmaking coal, nickel and platinum. 

“We set our clear strategic priorities earlier this year – operational excellence, portfolio simplification and growth. Our decision to focus Ango American’s portfolio in our world-class resource asset base in copper and premium iron ore – while retaining our crop nutrients optionality at Woodsmith – marks a major new phase in executing our strategy,” Anglo American Chief Executive Duncan Wanblad said.

“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction," he continued.