Anglo’s Cynthia Carrol snubbed by Chile president as Codelco fight becomes issue of national pride

The Telegraph reports Anglo American CEO Cynthia Carroll took a last-minute flight to Santiago on Thursday to calm tempers over the sale of a 24.5% stake to Mitsubishi Corporation but neither Chile’s president Sebastian Pinera, finance minister Felipe Larrain or mining minister Hernan de Solminihac would see her.

She is understood to have contacted all three before announcing the $5.39 billion deal that undermines state-owned copper giant Codelco’s plan to exercise the 33-year old option to buy half of Anglo’s Sur copper complex that includes the newly expanded $2.8 billion Los Bronces mine. The Mitsubishi transaction values Anglo Sur at $22 billion and Anglo’s stock is up 4.8% from its Wednesday close ahead of the deal. Codelco was offering $6 billion for 50%.

The Telegraph reports Anglo is now facing a legal assault from Codelco, which has hired New York litigation specialists Cleary Gottlieb as well as three of Chile’s top legal firms and financial advisor Rothschild in anticipation of launching a legal case.

“We’re not going to sell 49 percent of Anglo Sur to Codelco,” Chief Executive Cynthia Carroll said in an interview published in El Mercurio newspaper on Friday and reported by Reuters. “One can want many things, but contracts allow for other things.” Over and above the lowball offer from Codelco, what must have really galled Anglo is that they would have had to pay around $1 billion in taxes on the transaction.

FT reports Carroll would have to employ all her diplomatic nous over the coming months and quotes the president of Codelco’s board: “You can be sure we take any necessary action to safeguard Codelco’s rights and thus the rights of all Chileans.”

Proactive Investor reports both Deutsche Bank and RBC repeated their bullish recommendations for the stock on Friday, while Deutsche decided to increase its target price because of the Mitsubishi deal. The expansion of the sought-after Los Bronces mine should increase Anglo’s annual copper output by more than 10%.

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