BHP Group Proposes £31.1 Billion Takeover Bid for Anglo American

BHP Group, the world's largest mining company, has made an unsolicited all-share buyout proposal to acquire rival Anglo American in a deal valued at £31.1 billion ($39 billion). The proposed transaction, if successful, would create the world's biggest copper miner, producing around 10% of global copper output.

Anglo American confirmed that it is currently reviewing the non-binding and highly conditional proposal with its advisers. Under the terms of the offer, Anglo American shareholders would receive 0.7097 BHP shares per Anglo American share, representing a 31% premium on the implied market value of Anglo American's unlisted assets. However, there is no certainty that an offer will be made or on what terms.

The potential deal is conditional on Anglo American first splitting off its South African platinum and iron ore units, Anglo American Platinum (Amplats) and Kumba Iron Ore, to its shareholders. This move would significantly lower Anglo American's exposure to South Africa.

For BHP, the clear attraction of the acquisition would be Anglo American's extensive copper operations in South America. The mining industry has seen an uptick in merger and acquisition activity as companies position themselves for changing demand patterns, particularly the growing need for metals critical to the energy transition. Copper, a key component in renewable energy technologies, has experienced a 15% price increase this year, reaching nearly $10,000 per ton.

Why this matters: The proposed mega-merger between BHP and Anglo American could reshape the global mining industry landscape. The deal has the potential to prompt further transactions as companies review their assets to raise exposure to metals essential for the clean energy transition.

Analysts suggest that the buyout offer from BHP could prompt other mining giants, such as Rio Tinto and Glencore, to make competing bids for Anglo American. The proposed acquisition is expected to face regulatory scrutiny given the concentration it would create in the global copper market.

Mining Merger: The potential deal marks a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in recent years under CEO Mike Henry. If the takeover is successful, it would represent the biggest mining merger since Glencore's acquisition of Xstrata in 2012.

Anglo American has long been viewed as a potential target among the largest miners due to its significant copper operations. However, the company's complicated structure and exposure to South Africa have deterred potential suitors in the past. "Anglo has faced setbacks in the past year, including plunging prices for some of its key products and operational difficulties, making it vulnerable to potential bidders," an unnamed source familiar with the matter stated.

Key Takeaways

• BHP Group made a $39B all-share bid to acquire rival Anglo American.
• The deal would create the world's largest copper miner, producing 10% of global output.
• Anglo American must first split off its South African units to lower exposure.
• The deal could prompt other mining giants to make competing bids for Anglo American.
• The proposed merger faces regulatory scrutiny due to its impact on the global copper market.