OWN CORRESPONDENT, London | Thursday
MINING giant Anglo American has agreed to swap almost all its equity in South African bank FirstRand, its biggest non-core asset, for stakes in rival miners Billiton and Gold Fields.
In a move bound to cause anxiety in the Billiton boardroom in particular, Anglo said it had sold three-quarters of its FirstRand stake to SA diversified industrials company Remgro Ltd in return for the minority stakes.
The deal enables Anglo to virtually wipe FirstRand off its books, fulfilling a promise to investors, and gain strategic footholds on the shareholder registers of one of its biggest rivals, Billiton, and one of the world’s biggest gold miners.
The announcement, made after the London and Johannesburg market close, is likely to improve sentiment toward Anglo and is a major step in its strategy of concentrating on mining and other natural resources, a mining analyst said.
”It’s good news. I think it’s going to be well received by the market,” said Charles Kernot of investment bank BNP Paribas.
Anglo said it had undertaken not to make an unsolicited bid for Billiton before the end of next year and promised not to increase its 7.1% stake to more than 15% during that period – unless anyone else makes a bid for Billiton.
Anglo’s stake in Billiton and the extra 11.3% it has acquired in Gold Fields, South Africa’s second-biggest gold miner behind AngloGold, are together worth about $760m at Tuesday’s closing prices.
The FirstRand stake was worth $820m at Tuesday’s close in Johannesburg. That stake has effectively been sold at a seven percent discount but Anglo will book a significant accounting profit on the book value of its FirstRand stake.
Billiton noted Anglo’s assurance that it would not make an unsolicited bid for a company within the next year and said it had an excellent working relationship with Anglo, citing the two groups’ cooperation in chrome, manganese and coal ventures.
But Billiton said it would be inappropriate for Anglo to sit on its board. ”I think Anglo, like ourselves, probably recognise that it’s inappropriate,” company representative Marc Gonsalves said. – Reuters