Anglo American has rejected a takeover bid by Australian mining firm, BHP, for £31bn.

BHP stated yesterday that it was considering making a bid for the British multi-national mining firm, but Anglo American has said the offer "significantly undervalues Anglo American and its future prospects".

It added that the proposal contemplates a structure which the firm believes is "highly unattractive for Anglo American’s shareholders, given the uncertainty and complexity" of the proposed deal, whilst also carrying "significant execution risks".

Chairman at Anglo American, Stuart Chambers, said: "The BHP proposal is opportunistic and fails to value Anglo American's prospects, while significantly diluting the relative value upside participation of Anglo American's shareholders relative to BHP's shareholders.

"The proposed structure is also highly unattractive, creating substantial uncertainty and execution risk borne almost entirely by Anglo American, its shareholders and its other stakeholders. Anglo American has defined clear strategic priorities - of operational excellence, portfolio, and growth - to deliver full value potential and is entirely focused on that delivery."

The deal initially worried analysts as the potential offer, which was not officially submitted to regulators, would have seen another British firm move away from the London Stock Exchange, as firms including Ocado and Superdry look to either move elsewhere or delist.

Investment director at AJ Bell, Russ Mould, added: "The usual playbook for mega deals in the resources space is for the original suitor to respond to rejection by coming back with a better offer, or someone else throwing their hat into the ring. That contender could be Rio Tinto as it will certainly be watching activities with keen interest given it can see the same opportunity as BHP.

"Copper demand is expected to keep growing for years to come, thanks to the energy transition requiring large amounts of metal for things like wind turbines, solar panels and electric vehicles. Buying Anglo American is a lot easier than drilling thousands of holes in fields and mountains in far-flung places in search of the metal. Exploration is a laborious process but acquiring a ready-made package of assets is a much easier task.

"There is always a right price to buy a company – we just haven’t got there yet with Anglo American."

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