Anglo had granted BHP a one-week extension until Wednesday to its original May 22 deadline to submit a binding offer, after last week rejecting a third takeover proposal that it dismissed as difficult to execute.

“While we believed that our proposal for Anglo American was a compelling opportunity to effectively grow the pie of value for both sets of shareholders, we were unable to reach agreement with Anglo American on our specific views in respect of South African regulatory risk and cost,” BHP said in a statement.

“We remain of the view that our proposal was the most effective structure to deliver value for Anglo American shareholders, and we are confident that, working together with Anglo American, we could have obtained all required regulatory approvals, including in South Africa.”

Anglo’s shares extended losses and were 4 per cent lower at 24.53 pounds by 3.39pm GMT.

“While we believe an acquisition of Anglo would be a longer term positive for BHP, the fact that BHP is being disciplined in its approach is a near-term positive for its shares,” Jefferies analyst Christopher LaFemina said.

“That said, we are surprised BHP did not have a plan to overcome the clear structural issues relating to this deal.”

London-listed Anglo agreed to hold talks with BHP to try to iron out concerns over the structure of the proposed deal, namely its condition that Anglo unbundle its South African platinum and iron ore units before the takeover.

In an earlier statement, BHP said it needed more time to engage with Anglo, while outlining commitments to minimise regulatory risk in South Africa and saying it would offer a break fee if the deal failed to gain regulatory approvals.

Those commitments included job security for employees in South Africa. BHP also said it would shoulder the costs of increased South African employee ownership that is expected to be required in any demerger.

But Anglo said those commitments were not enough.

“BHP continues to restate its belief that the risks of its complex structure are not material, yet has repeatedly and consistently stated both publicly and during the engagements that it is unwilling to amend its proposed structure to assume these risks,” Anglo said in its statement.

– With AAP