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BHP has proposed a £31 billion takeover of Anglo American that would bring together two global mining companies and rank as one of the industry’s biggest transactions in years.
The world’s largest mining group said on Thursday it had offered 0.7097 BHP shares for every Anglo share as it looks to expand its portfolio of copper mines.
BHP said its offer values each Anglo share at £25.08. Anglo shares rose 13 percent to £24.89 in early trading in London, giving the company a market capitalization of £30.5 billion.
Demand for copper is expected to increase due to the global shift away from fossil fuels. This metal is heavily used in renewable energy projects and electric vehicles.
BHP said the deal would increase Anglo American’s “exposure to future-facing commodities” through its world-class copper assets. The alliance involving the two listed groups will be one of the most impressive in the mining sector since Glencore’s acquisition of Xstrata in 2013.
Anglo owns some of the region’s most prestigious copper mines in Peru and Chile, but Chief Executive Duncan VanBlade has come under intense pressure since December, when the company revealed a big drop in its production forecasts. Anglo said it had received an unsolicited bid from BHP and was reviewing it.
Its De Beers diamond division and platinum metals unit have been hit by low prices. The company’s London-listed shares had fallen by more than a third since the beginning of last year before news of the bid broke.
Shares in BHP, which has a primary listing in Sydney and a market capitalization of A$229bn (US$149bn), fell 0.6 percent to A$45.23 on Thursday.
Anglo said that as part of any deal, BHP was proposing the spin-off of two Anglo units – Anglo American Platinum, the platinum division known as Amplats, and Kumba Iron Ore. Both are listed in South Africa.
The proposal is likely to cause controversy in South Africa ahead of the country’s general elections in May.
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BHP’s approach to Anglo comes a year after the Melbourne-based mining company completed a $9.6 billion acquisition of Australian rival Oz Minerals, increasing its exposure to copper.
The deal sparked a wave of transactions in the industry, but BHP management has since said it will be disciplined in its approach to further M&A as it looks to integrate Oz and finance the growth of its potash operations. Focused on nurturing.
BHP dropped its primary listing in London in 2022, simplifying its corporate structure to better prepare it for potential consolidation opportunities following the divestment of its oil and gas business, which was expected to be sold to Australia’s Woodside in the same year. Merged into.
Anglo, founded 107 years ago, is one of the London Stock Exchange’s 25 most valuable companies, and BHP’s proposal is likely to heighten concerns about a flight of companies away from the UK capital.
Some BHP investors said there were too few details about whether the acquisition would appeal to shareholders, but others said it made sense given BHP’s focus on growing its copper portfolio.
Andy Forster, senior investment officer at Argo Investments, which holds shares in BHP, said the deal would ultimately be judged by its cost. “It makes sense for copper, but as always with large complex transactions it is hard to accomplish without destroying the value,” he said.
Christopher LaFemina, an analyst at Jefferies, said in a note that Anglo “could be a compelling fit at the right price” but said any deal could face antitrust issues because of the companies’ combined position in copper.
“If BHP indeed continues to pursue this deal, we would be surprised if other bidders do not come forward,” he said.
Anglo is being advised by Centreview, Goldman Sachs and Morgan Stanley. UBS and Barclays are advising BHP on the proposal, according to people familiar with the matter.
Bloomberg first reported that BHP was considering a takeover of Anglo.
