Anglo American, De Beers’ parent company, has announced a restructuring that involves demerging or selling off De Beers.
According to a statement released by the company on Tuesday, Anglo American is simplifying its portfolio by focusing on copper and premium iron ore, which are in high demand for use in electric vehicles and steel production.
The company will also be demerging its 79% ownership in Anglo American Platinum (Amplats).
“De Beers will be divested or demerged to improve strategic flexibility for both De Beers and Anglo American,” the statement reads.
It also proposes the sale of its steelmaking coal assets and the closure or sale of its nickel operations.
“We expect that a radically simpler business will deliver sustainable incremental value creation through a step change in operational performance and cost reduction,” says Duncan Wanblad, Anglo American’s chief executive.
According to the statement, Anglo American’s shareholders will see the full undiluted upside from these changes.
“These actions represent the most radical changes to Anglo American in decades. I believe these are the right decisions to position Anglo American to capitalise on the outstanding resource endowment opportunities within our portfolio today,” Wanblad says.
All this comes three weeks after Anglo American rejected a proposal from BHP Group to combine the two companies.
Anglo American owns 85% of De Beers, with the other 15% being owned by Botswana.
The proposal comprised an all-share offer for Anglo American by BHP, with a requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to Anglo American shareholders.
“The board has considered the proposal with its advisers and concluded that it significantly undervalues Anglo American and its future prospects,” the statement reads.
It says the proposal was unattractive for Anglo American’s shareholders.
“The proposal contemplates a structure which the board believes is highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity inherent in the proposal, and significant execution risks,” the statement reads.
The board therefore unanimously decided to reject the proposal.
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