Australian mining giant BHP wants to buy British rival Anglo American for $38.8 billion, in what would be one of the industry’s biggest mergers in years and create the world’s largest copper producer.
BHP, whose market valuation is around $148 billion, is offering 25.08 pounds per Anglo American share, which would give the target company a market valuation of 30.5 billion pounds ($38.8 billion).
“The combination of the two companies would place the strengths of BHP and Anglo American in an optimal structure,” commented BHP in its press release on Thursday, also estimating that “Anglo American would bring assets and strong growth potential”.
Anglo American, which had announced earlier in the day that it was the subject of an “unsolicited” takeover proposal from BHP, saw its shares soar by 13.56% on the London Stock Exchange to 2,504 pence. — below BHP’s offer price. BHP fell 3.31% to 2,285.64 pence around 11:20 GMT.
This marriage, if it materializes, “would create the largest listed mining and copper producer in the world,” notes Neil Wilson, analyst at Finalto.
“Let’s not be afraid to say it: it’s monstrous,” he adds.
“The board of directors is currently reviewing this proposal” for a share buyout, Anglo American said in a statement, adding that “there is no certainty that an offer will be made, nor as to the conditions under which such an offer will be made. offer could be made.
“Pending further announcements, Anglo American shareholders should not take any action,” according to the British giant, for this offer which must be made before the May 22 deadline.
Long-term trend
BHP’s proposal would involve a sale by Anglo American of its platinum and iron ore operations in South Africa.
The Anglo-Australian giant, one of the world’s largest mining companies, recently experienced a drop in profit following falling global nickel prices and compensation payments following a 2015 mining disaster. in Brazil.
Anglo American announced earlier this year its intention to cut thousands of jobs in its platinum business in South Africa.
Neil Wilson notes that Thursday’s surge in the stock of Anglo American, which has not had a very good year so far, “erases its stock market losses of the last twelve months.”
“BHP clearly wants to get its hands on the copper assets,” continues Mr. Wilson, who believes that the competition authorities would not fail to notice this “given the position on the copper market that the two combined companies would hold” — approximately 10% of world production.
The properties of copper, in particular its high conductivity and its ductility (the fact of being able to be deformed without breaking) make it a key metal for the energy transition, allowing numerous industrial uses such as the composition of vehicle batteries. electrical.
“South Africa’s platinum and iron ore assets would be offloaded, which would be politically sensitive,” Wilson notes, adding that if BHP fails, “others will try again” because “the fund megatrend is that long-term demand for metals will increase,” concludes the analyst.
Acquiring Anglo American would also give BHP greater access to potash and coking coal in Australia.
It would also mark a new blow for the London Stock Exchange, which would lose yet another value of its flagship FTSE 100 index.
The weakness of the pound against the dollar and the undervaluation of companies on the London Stock Exchange compared to Wall Street, for example, make companies listed in London increasingly frequent targets for acquisition operations.
“BHP’s offensive on Anglo American has put investors on alert as to who else, among the big names on the London Stock Exchange, could be the next to be the subject of an offer”, notes for its part Russ Mould, analyst at AJ Bell.