Anglo American share price: Miner under pressure to spin off SA business

on Aug 15, 2016
Updated: Oct 21, 2019

Anglo American (LON:AAL) is being pressured by its biggest investor to spin off its platinum business in South Africa, The Sunday Times has revealed. The potential move could herald the break-up of the blue-chip miner, whose performance has been impacted by the ongoing weak commodity price environment.

Anglo American’s share price has surged in London this morning, having gained 2.01 percent to 874.10p as of 09:14 BST. The shares are outperforming the blue-chip FTSE 100 index which is currently 0.31 percent better off at 6,937.34 points.
The Sunday Times reported yesterday that South Africa’s Public Investment Corporation (PIC) was demanding a shake-up of Anglo American. PIC’s proposal includes spinning off Anglo’s South African platinum operations into a new company, whose shares would be distributed to investors. Sources close to the situation told the newspaper that Anglo’s chief executive Mark Cutifani had so far resisted the demands.
Carving out Anglo’s South African business is expected to reduce the FTSE 100 group to a company focused on just two divisions, with the miner currently undergoing a restructuring, aiming to focus around three core products: copper, diamond business De Beers and platinum.
“If they did this, it would be the end of Anglo,” a source told The Sunday Times. “There would be a queue of bidders for copper, offering big numbers that they would find it very hard to turn down. That would leave it with De Beers.”
PIC, which took an advantage of the slump in Anglo American’s share price last year to hike its stake in the group, currently holds past 13 percent, up from 8.3 percent a year ago. The blue-chip miner’s shares meanwhile have recovered and are up more than 190 percent in the year-to-date.
As of 09:50 BST, Monday, 15 August, Anglo American plc share price is 873.10p.

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