Anglo American's management does not consider a proposed $39 billion takeover offer from BHP Group (BHP.AX) as attractive, two sources told Reuters, as some investors and analysts dismissed it as opportunistic.
BHP on Thursday offered Anglo's shareholders 25.08 pounds ($31.39) per share, or $38.8 billion, a premium of 31% to the market close on Wednesday. It would take over Anglo after a spin-off of two assets.
Speaking on condition of anonymity because the matter is private, one of the sources said the offer did not address the complexities of demerging the Anglo American Platinum (AMSJ.J) and Kumba Iron Ore (KIOJ.J) businesses in South Africa.
BHP has until May 22 to come back with a binding bid.
Anglo, which has a market value of $36.7 billion, said it would be reviewing the offer, without elaborating.
The proposed tie-up would create a group with around one tenth of the global output of copper, which is in demand for its use in electric vehicles and new technologies, such as automation and artificial intelligence.
BHP has made the offer as Anglo continues a strategic review of its assets started in February in response to a 94% fall in annual profit and a series of writedowns caused by to lower commodity demand.
One of the sources said Anglo's management was continuing "full steam ahead" with the review.
The company has also been looked for other ways to strengthen its position.
Two sources close to the matter said Anglo American in March picked investment bank RBC Capital Markets to begin a syndication process for its costly Woodsmith fertiliser project in northeast England, accelerating the search for an investor to share the $9 billion capital cost.
RBC was not immediately available to comment.
Another source said Anglo American was looking for partners for its diamonds De Beers business, which is among the assets BHP has said it would review after completion of any deal.
Analysts, meanwhile, also said the offer was probably not enough and that Anglo American's assets could be a better fit for othe major mining companies.
"This (BHP's) offer isn't enough to get either the board or the shareholders over the line," Liberum analyst Ben Davis said.
Analysts at Deutsche Bank said the "strategic rationale" of a merger could be as strong for Rio Tinto (RIO.L), (RIO.AX) and Glencore (GLEN.L).
"The proposed offer by BHP could potentially spur alternative bidders to enter the frame," they said.
Rio Tinto and Glencore both declined to comment on any possible interest and BHP declined to give any additional details beyond its offer.
Nichola Stein, portfolio manager at Coronation Fund Managers, which holds Anglo American shares, was also dismissive.
"The offer price appears quite opportunistic, especially when they say: get rid of the stuff we don't want before it ...even goes through, making it conditional on that," Stein said.
