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Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY) has started a formal process to sell its coal assets and explore options for its nickel operations, CEO Duncan Wanblad told Reuters on Thursday, after the company thwarted BHP’s (BHP) takeover threat.
In its effort to stay independent, Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) unveiled a radical plan to shrink by divesting its steelmaking coal assets, demerging its South African platinum business, potentially shutting its nickel mines, and selling or demerging its De Beers diamond unit.
“We are now starting the formal processes for the divestment or the demergers of these businesses,” Wanblad told Reuters.
The CEO said Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) five operating coal mines, development projects and joint ventures in Australia have seen “more interest” in recent weeks since the company described its divestment plan; Bank of America analysts have valued the coal portfolio in the $5.6B-$7.9B range.
Analysts at UBS and Jefferies downgrade Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) to Neutral from Buy on the execution risk of the miner’s disposal plan, such as the multiple at which the new core of copper, iron ore and nutrients would trade after a break-up, and the proceeds from a sale of De Beers.
In a more optimistic view, Anglo’s (OTCQX:AAUKF) (OTCQX:NGLOY) breakup plan should generate a higher value than the price offered by BHP (BHP), according to Quilter Cheviot analyst Jamie Maddock, noting the takeover battle has placed the miner’s assets under the spotlight and thus could spark high interest.
Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) could still face another offer from BHP (BHP) or another interested party if the planned breakup takes too long, Maddock says.
“The vultures will continue to circle on Anglo just in case management makes some kind of misstep. However, given the quality of assets on offer, we are hopeful this won’t be the case,” Maddock writes.
