Table of Contents
- Anglo American acquisition would give BHP greater exposure to copper
- BHP now has until 5pm on May 22 to declare “a firm intention to make an offer”
Mining giant BHP has revealed a potential £31bn bid to buy rival Anglo American in a deal that could create the world’s largest copper miner.
FTSE 100-listed Anglo American, the world’s biggest platinum producer, said BHP, its much larger Australian rival, had made an “unsolicited, non-binding and highly conditional” offer for all of the group’s shares.
Under the proposal, Anglo American would sell stakes in its Kumba platinum and iron ore businesses to its shareholders, who will receive £25.08 per share, a premium of around 31 percent over the closing share price of Anglo American. the company on Tuesday.
The expanded business would be responsible for producing about 10 percent of global copper production.
Takeover deal: Anglo American, the world’s largest platinum producer, has received a £31bn takeover offer from mining giant BHP, its much larger Australian rival.
For BHP, the acquisition would give it greater exposure to copper, a crucial element in the energy transition, given its use in technologies such as electric vehicles, solar panels and wind turbines.
It also said the alliance would combine the strengths of the two companies in an “optimal structure” and generate “significant synergies” that would reinforce value and profits for shareholders.
The Melbourne-based company, which is listed in both London and Australia, believes the deal would be “attractive to communities where greater financial strength could support further development”.
BHP now has until 5pm on May 22 to submit a concrete takeover offer in accordance with city rules or withdraw.
“This announcement does not represent a firm intention to make an offer and there can be no certainty that an offer will be made,” he told investors.
The possible agreement “will send a new chill through the City of London”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said an Anglo American takeover “will not only shake up the mining industry but will send a new chill through the City of London”.
“There is concern that if the deal goes through, it could be the tip of the iceberg and more giants could abandon the exchange.”
Investors in Paddy Power owner Flutter Entertainment will vote on May 1 whether to move its primary listing from London to New York.
If approved, Flutter would join building materials supplier CRH, plumbing products specialist Ferguson and mining group AngloAshanti Gold, which recently moved to the United States.
Oil major Shell, Britain’s largest listed company by market capitalization, is also considering a move to Wall Street just two years after abandoning its dual listing structure.
Anglo-American stocks soared 12.7 per cent to £24.85 on Thursday morning, taking its gains since the start of the year to around a quarter, while BHP Group Shares fell 2.3 per cent to £23.09.
2023 difficult for the mining sector
Both BHP and Anglo American’s revenues and profits fell significantly over the last financial year due to falling commodity prices amid a slowdown in global economic growth.
BHP saw its underlying attributable profit fall to $13.4 billion for the year ending June 2023, after earning a record $23.8 billion in the previous 12 months.
Trading was affected by lower copper, iron ore and metallurgical coal prices, as well as higher diesel and electricity costs, and the development of Western Australia’s South Flank mine.
Meanwhile, Anglo American launched a review of its assets after the company’s annual profits fell 94 percent to $283 million in 2023 following a drop in demand for palladium and rhodium.
The London-based group also wrote down $2.4 billion on its diamond and nickel units, including $1.6 billion on the value of De Beers.