The Anglo-BHP saga is over, for now. BHP has decided to walk away, after failing to win the support of the Anglo American board for its takeover bid. But this is unlikely to be the last attempt to take over Anglo, nor is the going to be the last attempt by BHP to buy more copper assets

As I wrote when BHP first made its move, the bid was never a particularly tempting one. Not only was the structure of the deal complex, and the execution risk high, but an all-share bid is inherently a riskier proposition than one with a cash component.

But despite widespread scepticism that a compromise would ever be reached, the bid has certainly helped wake investors up to the value of Anglo's portfolio, despite all its management struggles. 

At time of writing, Anglo shares are up nearly 18% from where they were before BHP made its first offer late latest month. And perhaps most importantly, they are now up some 45% from where they were in early December last year, when the company announced a slew of production cuts in the face of rising costs. Shareholders who kept the faith, and did not give in to the wave of selling last year, will be feeling vindicated.

South African government remains the kingmaker

There have been other fringe benefits for Anglo from this episode, Anglo American chief executive Duncan Wanblad has been forced to lay out, in detail, his own plans to shake up the company, giving shareholders some much needed clarity on exactly what to expect in the coming months.

And the the threat of a BHP takeover has managed to win tacit support from the South African government for Anglo's own restructure plans, including the divestment of Amplats. 

Before the BHP bid, Pretoria might have been expected to oppose any sale of South African assets. But half a loaf is better than no bread, and the government clearly feels that an independent Amplats is a price worth paying if Anglo keeps hold of Kumba. 

In practice, government support is not essential for the divestment. South Africa has much less ability to thwart a spin-out than it would have had to derail the BHP takeover, but a derisking of relations with the government, which is a major shareholder, ahead of a crucial restructuring will be a relief for investors. 

Of course, any predictions about South Africa, and its attitude to miners, are currently on hold pending more clarity on the results of the election, the makeup of a new government (potentially a coalition or a minority administration), and a potential ministerial reshuffle. Gwede Mantashe, the outspoken mining minister, emerged as a perhaps unlikely ally of the Anglo board. 

Build or buy for BHP?

So what's next in M&A? Well, firstly, a BHP takeover is by no means permanently off the table. Under UK rules it will be able to bid again in six months. It could also make a new attempt if invited by the Anglo board, or if a new bidder reappears. The question is whether it is willing to drop its conditions, or wait for Anglo to slim down all by itself. 

But assuming that the Anglo deal is off the table, BHP will now have to broaden its horizons. The miner has made clear that it wants to expand its copper footprint. How to do this without access to BHP's tier-one assets? The answer could be a smaller, more manageable deal to take on a more copper-focused company. This could be the troubled First Quantum, or Ivanhoe Mines, although ironically the latter would come with a hefty platinum project in tow, potentially echoing BHP's Amplats headache. 

An optimist might wonder if BHP will instead turn its mind to organic growth, and accelerate the search for a desperately-needed new tier-one copper mine. Hope springs eternal. 

De Beers on the block

For Anglo, meanwhile, there are some divestments to be getting on with. Aside from the Amplats spin-off, which most investors feel is desperately needed, there are some choicer assets. The Australian coking coal business is the biggest potential catalyst for the share price. An all-cash deal, if one can be found at a fair price, would go a long way to solving Anglo's money troubles.

The De Beers sale is another intriguing proposition. Diamonds may be in a slump right now, but the brand and legacy of the company could be highly attractive to some buyers. As I have argued, diamonds are not a natural fit for diversified miners, and some real value could be crystalised by moving the company into other hands, whether it is a trading house, a sovereign wealth fund, or a luxury goods company. 

Then there is the prospect of a new bidder emerging for Anglo. The question is whether they will want to make their move now, or wait until the tricky restructuring plan has already been handled. Rio Tinto and Glencore have already been mentioned as potential buyers. But if Anglo investors want a cash deal, it is much more likely to come out of China. 

More diplomacy needed

And although no-one likes to admit it, there are more personal considerations. It is clear that Wanblad is far from ready to walk away from Anglo, and neither are the board and upper management. 

Despite the clear benefits that BHP's overtures have delivered for Anglo, the courting process has not been a warm one, marked by rapid and definitive rejections of every bid. The closest thing to encouragement that Anglo offered, a one-week extension to negotiations, was forced on the board by large shareholders. Any new bidder would be advised to spend a little more time mollifying the Anglo board before launching in with an offer, particularly if, like BHP, they come through with one that cannot succeed without full-throated board approval.