Anglo American Breakup Doesn’t Make Sense, Fund Managers Say

Anglo American Plc, the owner of the world’s biggest platinum producer, has little reason to separate its South African and international operations, as mooted by Bank of America Merrill Lynch, four fund managers said.

“If you break it up, there may be a short-term re-rating, but it won’t do anything for Anglo in the long term,” Henk Groenewald, who co-manages Coronation Fund Managers Ltd.’s resources fund, said today by telephone from Cape Town. “The long-term value in Anglo is the cash flow in the future. ”BofA Merrill Lynch this week indicated Anglo may be wise to carve up its business, removing the effect of negative South African issues on the value of its international assets. Those issues include black empowerment requirements and chronic power shortages, Merrill said in a July 12 note. The recent award of prospecting rights at Kumba Iron Ore Ltd.’s Sishen mine to a company that “appears to be politically connected” also signals the local environment is “getting worse,” it said. Anglo’s international unit, potentially including its Chilean copper assets, Colombian and Australian coal, and Brazilian iron ore, may be valued at about $34 billion, BofA said. The South African business could be worth...