BHP is considering an acquisition of Anglo American, people with knowledge of the matter told Bloomberg.
Negotiations are said to be at an early stage and there is no certainty that BHP will decide to move forward with the deal.
Following the news, Anglo American confirmed that it had received an “unsolicited, non-binding and highly conditional” proposal from BHP and that “there is no certainty that any offer will be made, nor in relation to the terms on which such an offer could be made”. . BHP has not commented so far.
Anglo American is listed on the London Stock Exchange and has a market value of US$34 billion, while BHP has a market cap of US$ 149 billion – and is traded in both England and Australia.
Anglo American saw its profit fall 94% in 2023 after a US$2.1 billion write-down linked to its diamond and nickel operations. The company’s net debt increased from $6.9 billion to $10.6 billion.
During the earnings release in February, CEO Duncan Wanblad said the company was in a “systematic review process of all assets to assess their role in the portfolio” and “that absolutely nothing is off the table.” One of the company’s most coveted assets is its copper operation in South America.
In February, Anglo American sold a 15% stake in the Minas-Rio complex to Vale for US$157.5 million. In addition, it announced thousands of layoffs in South Africa.
The company’s shares have fallen 10% in the last 12 months.
Despite going through a delicate moment, Anglo American has already experienced much more complicated situations in the not-so-distant past.
In 2015, the company saw its shares plummet due to the drop in commodity prices and management failures.
BHP is the world’s third largest ore producer. In February, the company also reported an 86% drop in its net profit in the first fiscal half of the year – which runs from June to December. The main reason for the reduction was the decline in its nickel business and more provisions related to the Mariana disaster.
A sellside analyst states that it is still too early to predict the impact of the eventual M&A in Brazil, but the deal could represent a threat to Vale – and in its backyard.
“They would become the largest ore producers in the world and gain a source of high grade of ore, which is Anglo’s Minas-Rio,” he said.
In the fourth quarter, Minas-Rio’s production rose 15% year-on-year to 6.6 million tons. It was the best quarterly performance in the operation’s history.
André Jankavski
