In the fall of 2020, at the height of the coronavirus pandemic, Australian mining giant BHP completed a relatively small oil deal in the Gulf of Mexico and bought out minority partner Hess Corporation.
Looking back, the $505 million transaction marked the beginning of BHP boss Mike Henry’s acquisition offensive. That ambition culminated in the largest takeover drive in the history of the mining industry when BHP chairman Ken Mackenzie called his counterpart at Anglo American on April 16 to make a preliminary offer of $31 billion for the London-listed miner .
When he spoke to an investor about the Hess deal at the time, Henry admitted that he wanted to do this transaction in part “to train the board to make quick decisions and implement them,” the investor said.
Hess was followed by a failed bid for a Canadian nickel producer, the purchase of another nickel company in Tanzania in 2022 and the $6.4 billion purchase of Australian copper miner Oz Minerals last year. As a result, BHP sold its oil division.
Looking back, Henry was “close to getting the board, the company and the investors on the ladder back to big acquisitions,” the investor said. “He was clever in getting BHP into a state where it could actually do something like this.”
Dubbed “Meticulous Mike” by the Australian media, the Canadian manager must have carefully planned his move to Anglo, say people who know Henry. But the mega deal being discussed is far from a done deal.
Anglo rejected the unsolicited proposal on Friday, saying it “significantly undervalues” the company. Gwede Mantashe, minister of natural resources in South Africa, where Anglo has large operations and a secondary listing, also initially spoke out against the deal. The offer is complicated by the fact that it excludes Anglo’s large iron ore and platinum mines in the country and that the South African Public Investment Corporation is the company’s largest shareholder.
Under UK takeover rules, Henry has until May 22 to make a formal offer, but with BHP having saddled Anglo with a target, it could now face competition from rival suitors.
Anglo was founded in 1917 and is one of the 25 most valuable companies on the London Stock Exchange. The global portfolio includes sought-after copper mines in Chile and Peru, sophisticated platinum projects in South Africa and the world’s largest diamond producer De Beers.
According to Dealogic, an acquisition would be the largest transaction ever in the industry. It would also help BHP, the world’s largest mining group with a market value of $143 billion, cement its position as a leading copper producer, generating about 10 percent of the world’s mining supply.
A successful offering would have to come at a higher price and encompass the entire company, analysts and investors said. Anglo shares closed at £26.81 on Tuesday, well above BHP’s opening offer of £25.08 per share.
But Henry is said to have prepared for this scenario. “Anglo is in the game and the game is on,” said one person familiar with the approach.
When Henry was first chosen to succeed Andrew Mackenzie, who retired as BHP CEO in November 2019, few imagined that the soft-spoken Canadian would aspire to such a transformative impact.
Colleagues describe Henry as “reserved” and lacking the more assertive qualities of some of his colleagues in the Australian mining sector. Behind the scenes, however, he makes clear what his expectations are and puts forward forceful arguments. BHP and Henry declined to comment.
One long-time shareholder said Henry was “everything you could imagine a CEO of an efficient, process-driven company, but was bolder in portfolio repositioning and mergers and acquisitions than previous management.” He notes, “Mike is a BHP-style man.”
After growing up in Abbotsford, a small town 70 km east of Vancouver, he studied chemistry at the University of British Columbia and began his career at the Japanese trading house Mitsubishi in the 1990s. Henry has Japanese roots on his mother’s side and speaks the language fluently.
Had Henry not ended up in the mining industry, he might have become a diplomat or official at an international organization, he told the Financial Times in 2021. He joined BHP in 2003 and held positions including marketing director before joining the leadership team in 2011. From 2016 he led the company’s Australian operations, including its flagship iron ore business.
Since becoming CEO in 2019, Henry has kept a low profile. Not much attention was paid to his appearance in a corporate box at last year’s Australian Open men’s tennis final alongside top UBS bankers advising him on the Anglo bid.
A divorce two years ago brought his personal life into focus as he sold A$18.5 million worth of shares in BHP to reorganize his assets following the end of his marriage. To avoid the appearance of a conflict of interest, he sought board approval last year to enter into a new relationship with a woman who works for the Canadian company that is building a rail line linking BHP’s potash mine to major transportation routes.
Under Mackenzie, BHP spun off a group of non-core assets into the new company South32 and sold its loss-making US shale oil business. When Henry took over, he continued to focus on operational performance, but has since gone much further.
Twenty months after taking over, Henry unified the company’s complex structure by listing on the Sydney Stock Exchange and delisting from the FTSE 100 – the biggest change since the merger with Billiton in 2001.
This laid the foundation for Anglo’s approach as the simplification removed some of the barriers to large-scale mergers and acquisitions, investors said.
“This move is the result of a lot of preparation, planning, consideration and action,” said a person familiar with BHP’s offer.
The approach comes at a difficult time for Anglo – the company suffered its biggest one-day share price fall in 15 years in December – but also “feels like the culmination of a strategy,” another said.
A successful acquisition would build on the Oz Minerals acquisition and increase BHP’s access to copper via Anglo’s valuable projects in Peru and Chile.
Henry has focused BHP on what he described as “forward-looking” minerals, including iron ore, copper and potash, admitting the miner lacks medium-term “ready” projects to generate revenue as its core operations in Chile and Western Australia .
Buying Anglo, despite the complications, would allow BHP to have multiple such projects, perhaps for less time and money than it would need to find and build similar mines itself.
BHP, like many miners, also has a long history of value-destroying deals, and investors will have to decide whether they trust Henry to get this deal right. Its shares, which have risen 24 percent since he was named CEO, are only about 5 percent below where they were before the announcement was made.
Ben Davis, mining analyst at Liberum, said few investors were “rushing to sell” BHP because of the proposed deal. “Shareholders have great confidence in Mike Henry. Nobody thinks he’s a hyper M&A junkie.”
Additional reporting from Harry Dempsey and Harriet Agnew in London