BHP Billiton, the Melbourne-based Australian mining behemoth has made it official. This decision represents an extraordinary pivot in the tactics of either company since their entrance into the mining industry. Weeks later, BHP entered into negotiations with Anglo American’s board. Regrettably, these negotiations concluded without a positive resolution for either side.
The announcement constitutes a complete reversal of BHP’s prior strategy. The company had been intent on growing its portfolio with this acquisition. Instead, the company will change its appetite back to projects that advance multiple goals with the long-term view of improving a larger network. This move follows a deliberate evaluation of the opportunities and issues expected from gaining Anglo American.
On March 24, a pedestrian passed in front of BHP’s headquarters, a reflection of the company’s lively atmosphere. This scene can be taken as a sign of continued positive momentum at BHP, despite their retreat from a major acquisition. This historic building has witnessed many policy decisions by BHP that have produced sweeping changes over the years.
BHP’s withdrawal from the competition to acquire Anglo American. This decision underscores the dangers and complexities faced by oligopolistic companies in the mining industry when attempting to merge. After intense negotiations with Anglo American’s board, various differences in strategic priorities became clear and discussions broke down.
As one of the world’s largest publicly traded companies, BHP is a significant public transporter. It proactively seeks out market opportunities where it can play to its operational competitive advantages. Now, the company is betting its future on doing much smaller projects. We expect this shift to increase its speed, execution, and flexibility in an increasingly dynamic marketplace.