BHP Group Limited (ASX:BHP) will not be making a firm offer for Anglo American plc (LSE:AAL), saying its target had refused to provide key information that it required. The confirmation it would not proceed came just hours after Anglo rejected BHP's request for extra time to finalise a takeover bid, saying BHP's latest proposal did not address high complexity and risk. BHP Chief Executive Officer Mike Henry said this morning BHP was committed to its Capital Allocation Framework and maintained a disciplined approach to mergers and acquisitions.

"While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost," he said. Mr. Henry added that Anglo had not provided all the information BHP wanted. "Despite seeking to engage constructively and numerous requests, we were not able to access from Anglo American key information required to formulate measures to address the excess risk they perceive," he said.

Mr. Henry also reaffirmed his confidence that "working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa". BHP had attempted to keep its takeover proposal alive by announcing a package of socio-economic measures May 29, 2024 designed to address concerns raised by Anglo. Anglo was unmoved by this update.

"In aggregate, BHP has not addressed the Board's fundamental concerns relating to the disproportionate execution risk associated with the proposed structure and the value that would ultimately be delivered to Anglo American's shareholders," Anglo said. It said overnight the socio-economic measures proposed by BHP were confined in scope, impact and duration. "This approach does not sufficiently address the fact that Anglo American's shareholders would bear disproportionate execution and value risks and uncertainty over an extended period," Anglo added.

It noted that, throughout its engagement, BHP has continued to restate its belief that the risks of its complex takeover structure were not material. "Yet (BHP) has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks." In yesterday's update, BHP did not change the key terms of its scrip-based takeover proposal, which valued Anglo at AUD 74 billion. Instead, it put forward a series of measures to address Anglo's concerns, particularly in regard to the impact on South Africa.

Specific measures BHP proposed included sharing in the costs of increased South African employee ownership of Anglo American Platinum Limited (JSE:AMS) (Anglo Platinum) and Kumba Iron Ore Limited (JSE:KIO) (Kumba Iron) - the two businesses Anglo needed to divest as a precondition of BHP's proposal. BHP argued there would be clear benefits to the South African government, economy and communities from Anglo Platinum and Kumba Iron becoming standalone entities listed on the Johannesburg stock exchange. It proposed establishing a Mining Centre of Excellence to support R&D, training and promotion of South Africa as a premier mining destination.

Current employment levels would be maintained at Anglo's Johannesburg office for at least three years and BHP would maintain funding for Anglo's charitable commitments in South Africa. "BHP is confident that the measures it has proposed to the board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American and would support South African regulatory approvals," it said yesterday. "BHP has considered market precedent transactions and believes that the risks are quantifiable and manageable.

"BHP has already factored the costs associated with these risks into the offer ratio of its proposal".