BHP shares hit three-month highs as deadline for formal Anglo bid approaches

“Last week we saw that they had a small rebound after the Anglo rejection,” he said. “I think they will stay disciplined. “I would be surprised if they returned at this late stage given the lukewarm response from the Anglo board to previous offers.”

Under UK takeover rules, BHP has until 16:00 GMT on Wednesday to make a binding offer for Anglo American or it will be forced to withdraw for at least six months. If the companies reach an agreement in the meantime, an extension may be granted.

BHP declined to comment on Tuesday. Its shares rose 0.5% to A$45.93 in afternoon trading. Anglo’s London-listed shares closed up 0.1% at £26.80 on Monday.

Anglo’s board has already rejected two BHP share proposals as unsuitable and too difficult to execute and last week revealed plans for a division that would focus on copper, an energy transition metal, while spinning off or selling its coal, nickel , diamonds and platinum businesses.

The copper assets make strategic sense for BHP, but the longer the deal takes to close, the more likely it is that a competitor will launch a rival bid for some of Anglo’s assets, according to Hayden Bairstow, an analyst at Australian stockbroker Argonaut.

“The risk of waiting is that Anglo’s metallurgical coal assets will pass into someone else’s hands or that an interloper like Glencore will come in with a more compelling deal,” he said.

It would take Anglo a minimum of six to 12 months to execute a sale process for the coal assets, according to an Australia-based investment banker who spoke on condition of anonymity.

Bankers are now scrambling to get business from potential buyers, the person added.

Jefferies analysts said last week that BHP could be interested in coal assets if it was unsuccessful in its bid for Anglo, given it owns nearby mines.

BHP would need to increase its latest offer by about 30% to reflect the fair value of Anglo and its key copper assets, JPMorgan analysts said in a note last week.

Both BHP bids required Anglo to sell its platinum and iron ore assets in South Africa, where it employs more than 40,000 people.

BHP has told investors it will not remove the requirement for Anglo to spin off those businesses as a condition of the deal.