British mining giant Anglo American on Friday rejected a blockbuster $38.8-billion takeover bid from Australian rival BHP, slamming it as "highly unattractive" and "opportunistic".
The snub came one day after BHP had launched its colossal bid, which aims to create the world's biggest listed copper producer and reshape the global mining sector.
"The board has considered the proposal with its advisers and concluded that the proposal significantly undervalues Anglo American and its future prospects," the London-listed company said in a statement.
"The proposal contemplates a structure which the Board believes is highly unattractive for Anglo American's shareholders, given the uncertainty and complexity inherent in the proposal, and significant execution risks.
"The board has therefore unanimously rejected the proposal," it added.
The group advised shareholders to take no action over the gigantic offer, which would first hinge on Anglo splitting off its platinum and iron ore holdings in South Africa.
BHP is keen to obtain the group's global copper assets that include operations in Chile and Peru.
"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," said Anglo chairman Stuart Chambers.
"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."
He added that copper represents 30 percent of total production of Anglo, which stands to benefit from "significant value appreciation" arising from strong future demand.
"Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends," noted Chambers.
The offer, which was pitched at GBP25.08 per share, caused Anglo stock to surge 16 percent in value on the London stock market on Thursday.
Chambers insisted that the group was committed to its growth strategy.
"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."
Both Anglo and BHP have been wrestling with the transition away from traditional money makers such as gas and coal, increasingly eyeing opportunities to mine metals and critical minerals.
Copper is critical to the world's transition to renewable energy because it is vital for technology like electric vehicles, solar panels, wind turbines and energy storage.
Before the transition copper was primarily used in construction, electrical wiring and kitchen utensils.
But its exceptional conductivity and ductility -- the capacity to bend without breaking -- have made it a crucial product for the renewable energy industry.
