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While BHP’s [ASX:BHP] improved takeover offer for Anglo American [LON:AAL] was rejected yesterday (13 May) there’s likely to be an increasing sense of optimism at the bidder’s Melbourne headquarters.

The offer bump, coupled with share price declines on Anglo American, means the target’s stock price has fallen below BHP’s latest offer price for the first time since its pursuit began.

That will pile pressure on Anglo American’s board to engage with BHP constructively and could pave the way for a deal to be agreed – particularly if BHP is willing to provide a final additional offer increase.

A tepid market reception for Anglo American’s bid defence outlined this morning will only reinforce the view BHP now has victory in its sights. Shares in Anglo-American barely budged this morning following the announcement, trading around GBP 27.17. That’s a 2.8% spread to the implied value of BHP’s offer price of GBP 27.94 outlined yesterday. Until yesterday’s bid revision, shares in Anglo had been trading at a sizable premium to BHP’s offer.

Anglo American’s management team will present its bid defence to investors at 11 am BST after outlining the main components of the strategy in a stock exchange statement earlier this morning.

The plan confirmed what The Morning Flash identified as the one certainty for Anglo American as soon as BHP’s interest emerged last month – that a break-up of the mining conglomerate had become inevitable.

Key differences between the two pitches to shareholders include Anglo’s preference to retain rather than demerge its 69.7% stake in Kumba Iron Ore [JSE:KIO] but sell rather than retain coal mining operations in Queensland which BHP covets. Both BHP’s and Anglo American’s proposals include an intention to demerge the target’s 78.6% stake in Anglo American Platinum [JSE:AMS] and explore a potential divestment of diamonds operation De Beers.

There’s now little to choose between BHP’s proposed offer and Anglo American’s board’s own plan for the business as a result.

BHP’s revised offer valued Anglo American at GBP 27.53 per share and an equity value of GBP 34bn (USD 42bn), according to its statement yesterday. These calculations are based on undisturbed market values and exchange rates on 23 April, the day before speculation about a bid from BHP emerged.

The offer valued Anglo American at a slightly higher GBP 27.94 per share based on market prices as of the close on 10 May. Interestingly, recent share price gains on Kumba and Amplats – assets it will not retain as part of the deal – have helped boost the value of BHP’s offer by around GBP 1 per share, according to analysis by The Morning Flash.

Shares in Anglo American declined during yesterday’s trading session, closing down 2% at GBP 27.07. BHP’s shares performed solidly overnight in Australia, indicating investors remain sanguine about its pursuit of the deal.

A small additional offer bump from BHP ahead of next week’s 22 May bid deadline under UK Takeover Code Rules should be enough to secure engagement and support for a deal from Anglo American’s board.