LONDON (Reuters) - Anglo American (AAL.L) (AGLJ.J) appointed veteran industrialist John Parker as chairman on Friday, moving to bolster its leadership as it seeks to fend off an unwanted “merger of equals” proposal by rival Xstrata XTA.L.
Analysts said Parker was a strong choice given his management and merger experience, noting that although he made no mention of Xstrata, his first comments reiterated Anglo’s arguments that it has strong prospects as a stand-alone group.
RBS analyst Tim Huff said the appointment was a “huge positive strategically,” noting: “For Anglo shareholders, there will be a strong drive towards shareholder value, the delivery of which will in itself determine whether Anglo and Xstrata will go for a nil-premium merger.”
Michael Rawlinson at Liberum Capital said the appointment may still lead to talks with Xstrata or another suitor, but Parker would first want several months to assess the group.
“Having sold many companies he has a very strong track record in corporate action... His appointment will be taken positively by UK institutions since he will not be cowed into adopting a pre-existing strategy or be bullied into a deal.”
Anglo, which owns the world’s biggest platinum producer, said on Friday Parker would join the board immediately and take up the post held by retiring Mark Moody-Stuarton August 1.
Parker is chairman of British energy network provider National Grid (NG.L) and will retain that post, but will step down as co-chairman of paper and packaging group Mondi (MNDI.L)(MNDJ.J). Mondi was spun off from Anglo two years ago.
Anglo’s London stock fell 0.4 percent to 1,645 pence by 11:23 a.m., outperforming a 1.5 percent drop in the UK mining index.
Anglo has said Xstrata’s “nil-premium” proposal does not make sense partly due to what it regards as its own superior mining assets with longer lives, while many shareholders have said Xstrata must offer a premium.
It also points to its planned $2 billion (1.2 billion pound) cost cuts by 2011 compared with Xstrata’s merger synergies forecast of $1 billion.
“Anglo American has many great strengths, including a portfolio of high quality mining assets, an impressive growth profile, substantial and well advanced efficiency programmes and a unique position in precious commodities,” Parker said.
He offered support for Chief Executive Cynthia Carroll, who has been criticised in some media reports as not being as effective as her counterpart at Xstrata, Mick Davis.
“This global company has an opportunity to deliver considerable further growth and value in the coming years,” Parker said. “I look forward to working with the board and the excellent management team led by Cynthia Carroll to deliver those prospects to shareholders.”
South Africa, which had previously said it wanted Anglo to appoint a black South African as chairman, welcomed the choice.
“(Resources) Minister Susan Shabangu has welcomed the appointment of Mr. John Parker and has congratulated him. We did express our wish for a black South African to be appointed, but of course Anglo has made its decision and we look forward to working with the new chairman,” Shabangu’s spokesman said.
“We have a very good working relationship with Anglo.”
On Thursday a government source said it had a list of possible black candidates including business magnate and former union leader Cyril Ramaphosa, co-chairman with Parker at Mondi.
A Johannesburg-based analyst who declined to be named said shareholders would be happy with the government’s response.
“The government’s response doesn’t seem like they are overly disappointed, despite all the noise that has been made about wanting to have a black chairman... There will be some relief in the market.”
The government was watching the Xstrata-Anglo situation closely and reiterated concerns about possible job losses and anti-trust issues in any merger, the spokesman added.
In South Africa, Anglo owns Anglo Platinum (AMSJ.J), the world’s largest producer of the precious metal, as well as Africa’s biggest iron ore miner Kumba Iron ore (KIOJ.J) and Anglo Coal, the country’s second-biggest exporter of coal.
Additional reporting by Agnieszka Flak in Johannesburg; Editing by Dan Lalor, David Holmes and Simon Jessop