BHP’s bold bid for Anglo
SHAKE UP: WORLD’S BIGGEST MINING HOUSE THROWS OFFER OF R741BN
A successful takeover would be the first mega deal among big miners in over a decade.
BHP Group proposed a takeover of Anglo American that values the smaller miner at £31.1 billion (R741 billion), in a deal that would catapult the combined company’s copper production far beyond its closest rivals while sparking the biggest shakeup in the industry in over a decade.
Investors in Anglo American would receive 0.7097 BHP shares for each share they hold, as well as shares in Anglo American Platinum and Kumba Iron Ore.
Anglo’s market value was £27 billion at the close on Wednesday. Yesterday morning, following the group confirming the offer in a JSE Sens statement, Anglo’s share price shot up almost 15%.
The world’s biggest mining company has proposed an allshare deal in which Anglo would first spin-off controlling stakes in South African platinum and iron ore companies to its shareholders before being acquired by BHP.
The total per-share value of the non-binding proposal is about £25.08, BHP said, which is a 14% premium to Anglo’s closing share price on Wednesday.
Anglo shares jumped 13% in London yesterday morning to £24.91 apiece, for a market value of £30.5 billion. BHP, which has a value of about $144 billion (about R2.7 trillion), fell 3.7%.
A tie-up with Anglo would give BHP roughly 10% of global copper mine supply ahead of an expected supply shortage that many market watchers have predicted will send prices soaring.
If successful, the transaction would mark a return to largescale dealmaking for BHP, while potentially flushing out other suitors also aiming to boost their exposure to the metal that is closely linked to the global energy transition.
Anglo American has long been viewed as a potential target among the largest miners, particularly because it owns attractive South American copper operations at a time when most of the industry is eager to add reserves and production.
However, suitors have been put off by its complicated structure and mix of other commodities from platinum to diamonds, and especially its deep exposure to South Africa.
The company said in a statement late on Wednesday that its board was reviewing the proposal, which it confirmed after Bloomberg first reported BHP’s interest.
Big deals
A successful takeover would represent the first mega deal among the world’s biggest diversified miners in over a decade. BHP and its biggest rivals spent years on the sidelines after a series of disastrous transactions. “If BHP does indeed continue to pursue this deal, we would be surprised if other bidders do not emerge,” analysts from Jefferies LLC led by Christopher LaFemina said in an emailed note. A bid that values Anglo at $42.6 billion – a 28% premium based on its latest share price – might get a deal “across the finish line”, they said.
BHP last year bought copper producer OZ Minerals for about $6.4 billion in its first major purchase in years but has other
wise focused until now on selling assets such as oil, gas and coal.
Anglo’s valuation may make it more attractive, but it remains a highly complicated business.
The company owns majority stakes in two South African-listed miners – Anglo American Platinum and Kumba Iron ore – and is the majority owner of diamond miner De Beers.
It also has a long and complicated relationship with South Africa, where the state pension fund manager is its biggest shareholder.
BHP’s proposal was to first hand Anglo’s stakes in the two South African businesses to the smaller company’s investors before proceeding with a takeover, Anglo said. The two parts of the proposal would be “interconditional”, it said.
Anglo’s other operations include copper, nickel, steelmaking coal and Brazilian iron ore, as well as the iconic De Beers business.
It would be surprising if other bidders don’t emerge