Anglo American clears more clutter

August 12, 2009

CHILE-CODELCO/ANGLOAMERICANJohn Parker’s appointment as chairman of Anglo American seems to be having the desired catalytic effect – even though the British businessman is barely through the door.

Last month, the mining group disposed of its stake in Africa’s largest aluminium processor, Hulamin for a total of $150 million.

Now it is selling its stake in South African agri-processing group Tongaat-Hulett which could net it around $550 million.

This clears out most of the remnants from Anglo’s past as a diversified industrial holding company. Selling these bits and pieces has been a stated strategic objective for some time – so long as the price was right.

The disposals also help to reduce Anglo’s $11 billion debt pile. The group needs to get itself back on track to deliver on its promise of paying a dividend again if it is to fend off a merger of equals proposal from Xstrata.

Anglo is flogging its 49.5 percent stake in Tongaat to institutional investors — via an accelerated bookbuild and an exchangeable bond. It is getting a good price for Tongaat which was trading at above 100 rand per share before the sale was announced. The shares recently hit a year high of 103 rand, a long way from their lows of just below 50 rand in December last year, carried upwards by rising sugar prices.

This is all positive news for Anglo shareholders, but it still leaves a big question mark hanging over the future of Anglo’s least-loved asset — heavy building materials group Tarmac. Anglo insists this is not up for sale at current low valuations, following an earlier failed attempt to sell it in 2007.

But with asset sales becoming easier, it would make sense for Parker to at least dust off the Tarmac prospectus.

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