Global miner Anglo American's
Analysts and investors broadly welcomed the preemptive strike from Anglo -- one of the more conservative players in the sector -- and the high valuation secured, though some fretted that in the long-term Anglo may have damaged ties with the world's largest copper producer and the Chilean government.
Anglo said late Wednesday that it had sold a 24.5 percent stake in Anglo American Sur to Japanese group Mitsubishi Corp <8058.T>, valuing the assets at $22 billion and reducing the stake Codelco can buy in January through a long-held option.
Codelco -- which before the deal could have taken as much as 49 percent in Anglo American Sur -- has said Anglo was undermining its option to take a stake and has signalled it could seek to sue the London-listed miner.
Codelco's labour federation said Thursday that it rejected Anglo's attempt to elude and block the legitimate and legal right of Codelco to buy 49 percent of AAS.
Of course there is a risk (of a courtroom battle). But it comes down to what is in the original contract, Collins Stewart analyst John McGloin said, referring to the option contract, inherited when Anglo bought Anglo American Sur -- then Minera Disputada de Las Condes -- in 2002.
I doubt (Anglo) would have taken the steps that they have if they did not feel pretty confident that it was legal and I doubt that Mitsubishi would have stepped up to the plate if they were not confident it would go through.
Anglo American shares were up 2.97 percent at 1451 GMT at 2,420 pence, against a mining sector <.FTNMX1770> off 0.7 percent.
Codelco Chief Executive Diego Hernandez has said Anglo violated good faith under Chilean law.
Anglo Thursday reiterated it was wholly confident its move was compliant with the Codelco agreement.
Anglo began to meet other parties including Mitsubishi after talks in which it sought to buy out the option failed.
It approached Mitsubishi afresh after Codelco said last month it planned to exercise the option in January.
The biggest risk for (Anglo American) is in our view that its relationship with the Chilean government/Codelco may be impacted after this move, analyst Alain William at Societe Generale said in a note.
Chile is a significant part of Anglo's operations and Anglo American Sur accounted for 41 percent of its copper production in 2010.
RBS analysts said the deal's valuation -- 17.4 times EV/EBITDA compared with 13.2 times for other copper transactions over the past 12 months -- reflected the lack of significant copper opportunities available and the desperation that Japan has in securing access to copper concentrates.
Others pointed out Anglo had secured for 24.5 percent virtually the same amount the market had expected it to achieve in a sale of 49 percent to Codelco, based on the $6.75 billion bridge loan the state-owned miner secured with Mitsui <8031.T>. That would have valued AAS at around $13.8 billion.
Codelco, which last month announced the Mitsui deal and plans to buy the stake, delayed exercising the option in 2009, and was widely seen lacking financing to exercise it this time.
Anglo has said that under the terms of the deal it could still seek to sell an additional stake in Anglo American Sur, up to the moment in which Codelco exercises the option.
We expect extreme rancour from Codelco on valuation grounds, plus it can now only acquire 24.5 percent ... therefore this has the potential to scupper its side deal with Mitsui, Liberum analysts said in a note.
The speed and boldness of Anglo American's M&A guile in the last week has materially exceeded market expectations.
Anglo surprised the market Friday with news it would take control of diamond producer De Beers, buying out the Oppenheimer family in a $5.1 billion deal.
(Reporting by Clara Ferreira-Marques in London, Alexandra Ulmer and Simon Gardner in Santiago; Editing by Dan Lalor and David Cowell)