In the autumn of 2020 at the height of the coronavirus pandemic, Australian mining behemoth BHP completed a relatively small oil deal in the Gulf of Mexico, buying out minority partner Hess Corporation.
In hindsight, the $505mn transaction marked BHP chief Mike Henry’s nascent acquisition drive. This ambition culminated with the biggest takeover approach in the history of the mining industry, when BHP chair Ken Mackenzie called his counterpart at Anglo American on April 16 to deliver a $31bn preliminary offer for the London-listed miner.
Discussing the Hess deal with an investor at the time, Henry confided that he had partly “wanted to do that transaction to get the board trained to make quick decisions and execute them”, recounted the investor.
Hess was followed by a failed bid for a Canadian nickel producer, the purchase of a different nickel business in Tanzania in 2022 and last year’s $6.4bn purchase of Australian copper miner Oz Minerals. Along the way BHP disposed of its oil division.
Looking back, Henry was “almost walking the board, the company and the investors up the ladder, back to big acquisitions”, the investor said. “Where he has been clever is getting BHP into a state where it can actually do something like this.”
Dubbed “Meticulous Mike” by the Australian media, the Canadian executive must have carefully planned his move for Anglo, people who know Henry say. But the mooted mega-deal is far from a done deal.
Anglo rejected the unsolicited proposal on Friday, saying it “significantly undervalues” the company. Gwede Mantashe, minerals resources minister in South Africa, where Anglo has major operations and a secondary listing, has also voiced initial opposition to the deal. The offer is complicated by its preconditions that it excludes Anglo’s large iron ore and platinum mines in the country and by the fact that South Africa’s Public Investment Corporation is the biggest shareholder in the company.
Under UK takeover rules, Henry has until May 22 to make a formal bid, but having placed a target on Anglo’s back, BHP could now face competition from rival suitors.
Founded in 1917, Anglo is among the 25 most valuable companies on the London Stock Exchange, with a global portfolio spanning coveted copper mines in Chile and Peru, challenging platinum projects in South Africa and the world’s largest diamond producer, De Beers.
A takeover would rank as the industry’s biggest ever transaction according to Dealogic. It would also help BHP, the world’s largest mining group by market value at $143bn, to cement its position as the top copper producer, generating about 10 per cent of global mined supply.
A successful offer would have to be at a higher price and include the whole 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 play, and the game is on,” said one person familiar with the approach.
When Henry was first picked to replace Andrew Mackenzie on his retirement as BHP CEO in November 2019, few predicted that the mild-mannered Canadian would seek such a transformational impact.
Colleagues describe Henry as “reserved” and lacking the more assertive traits of some of his peers in the Australian mining sector. Behind the scenes, however, he is clear on what his expectations are and makes arguments forcefully. BHP and Henry declined to comment.
One longtime shareholder said Henry was “everything you’d imagine of a CEO of an efficient, process-driven company, but has been bolder around repositioning the portfolio and M&A than previous management”. He notes: “Mike is a man in the BHP mould.”
After growing up in Abbotsford, a small town 70km east of Vancouver, he studied chemistry at the University of British Columbia and started his career in the 1990s at Mitsubishi, the Japanese trading house. Henry has Japanese heritage on his mother’s side and is fluent in the language.
Had Henry not wound up in the mining industry, he might have been a diplomat or an official at an international organisation, he told the Financial Times in 2021. He joined BHP in 2003, holding roles including head of marketing before joining the leadership team in 2011. From 2016 he ran the company’s Australian operations, including its flagship iron ore business.
Since rising to CEO in 2019, Henry has retained a low profile. Not much was made of an appearance in a corporate box at last year’s Australian Open men’s tennis final alongside the top UBS bankers who are advising him on the Anglo bid.
A divorce two years ago thrust his private life into view as he sold A$18.5mn worth of shares in BHP to reorganise his assets after the end of his marriage. To avoid any perception of conflicts of interests, he sought board approval last year to start a new relationship with a woman who works for the Canadian company building a railway line connecting BHP’s potash mine to main transport links.
Under Mackenzie, BHP spun off a group of non-core assets into a new company South32, and sold its lossmaking US shale oil business. When Henry first took over, he continued the focus on operational performance but has since gone far further.
Twenty months into the job, Henry unified its complex structure by moving to a primary stock market listing in Sydney and dropping out of the FTSE 100 — the biggest shake-up since the merger with Billiton in 2001.
That laid the ground for the Anglo approach as the simplification eased some of the obstacles to large-scale M&A, investors said.
“This move is a product of much preparation, planning, thought and action,” said one person familiar with BHP’s bid.
The approach comes at a vulnerable moment for Anglo — the company suffered its biggest one-day share price drop in 15 years in December — but also “feels like the culmination of a strategy”, said another.
A successful takeover would build on the acquisition of Oz Minerals, boosting BHP’s access to copper via Anglo’s prized projects in Peru and Chile.
Henry has focused BHP on what he calls “future-facing” minerals, including iron ore, copper and potash, and admitted that the miner has a lack of medium-term “shovel-ready” projects to generate returns as its core operations in Chile and Western Australia mature.
Buying Anglo, despite the complications, would provide BHP with several such projects, potentially 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-destructive deals and investors will have to decide whether they trust Henry to get this one right. Its shares, which have risen 24 per cent since he became CEO, are only down about 5 per cent on where they stood before the approach became public.
Ben Davis, a mining analyst at Liberum, said few investors were “rushing out selling BHP” on the back of the proposed deal. “Shareholders have a lot faith in Mike Henry. No one thinks he is a juiced up M&A junkie.”
Additional reporting by Harry Dempsey and Harriet Agnew in London