Australian miner BHP offers to buy rival Anglo American for $36 billion to become a strong copper producer | Companies

View of the Anglo American mine at Los Bronces, near Santiago, Chile.Ivan Alvarado (REUTERS)

Anglo-Australian group BHP, the world’s largest listed mining company, has unveiled a £31.1 billion (about €36 billion) share offer for its British rival Anglo American. to become the world’s largest copper miner – a mineral highly valued for its role in renewable energy systems – with a share of close to 10% of global production.

Anglo American confirmed in a statement that it had received an “unsolicited, non-binding and highly conditional merger proposal” from BHP Group Limited. The offer for Anglo American will be all-share and will include the spin-off of two Anglo American businesses, Anglo Platinum and Kumba Iron. BHP offered £25.08 per share, including £4.86 per Anglo Platinum share and £3.40 per Kumba share. That price would be 14% above Anglo American’s closing price on Wednesday. Anglo American shares were up more than 13% in London trading this Thursday at £24.91, slightly below offer.

The board of the British company is studying the offer, although there is no certainty that a firm offer will be formalized, and if it is, the specific terms are unknown. The board of directors advised Anglo American shareholders to wait. Under British takeover rules, BHP has until May 22 to announce its intention to make a firm bid for Anglo American or abandon it.

Anglo American has long been seen as a potential takeover target for mining companies as it owns highly attractive copper assets in South America. The metal, one of the most in-demand for the economy’s transition to clean energy, means much of the mining industry is looking to add reserves and products to sell into the energy industry. If the proposal is accepted, BHP will have access not only to more copper, but also to potash, another key strategic raw material mainly used as an ingredient in fertilisers.

The Australian miner produced about 1.2 million tonnes of copper in 2023, compared with Anglo’s output of 826,000 tonnes, according to Bloomberg. This would give the combined group a roughly 10% share of global mining supplies. Jefferies analysts said that with such a high market share, antitrust issues are “likely to be an issue” for the deal as governments view copper as a strategic mineral.

The British company has faced some major headwinds in the past year, with prices for some of its key products falling and some operational and logistical difficulties forcing the company to cut its production plans, crippling it. stock market and left the company vulnerable to possible offers.

The success of the acquisition will be the first major deal between the world’s largest mining companies in more than a decade. BHP and its biggest rivals have been on the sidelines of mergers for years after a series of disastrous deals, but expectations are growing that the sector is headed for a wave of mergers and acquisitions as companies have excess liquidity and management teams struggle. reassure investors that they have learned from past mistakes.

This week ACS’s Australian subsidiary, Cimic, achieved 60% equity ownership in mining company Thiess, considered the world’s largest mining services provider by revenue and diversification, both geographically and in raw materials, beyond thermal coal activities.

“If BHP continues with this operation, it would not be surprising if other offers emerge,” Jefferies LLC analysts said in a note published by Bloomberg. The offer, valuing Anglo at $42.6 billion, 28% above Wednesday’s closing price, could see the deal “cross the finish line”, they added.

Last year BHP bought copper producer OZ Minerals for $6.4 billion, its first major purchase in years. Of interest in Anglo’s case is the South American copper business, which has long been coveted by major players in the sector, although the company has recently faced logistical challenges and been forced to cut copper production forecasts.

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