BHP, largest mining company listed on the stock exchange, makes an offer of US$39 billion for Anglo American

The group BHP (BHPG34) made a US$38.8 billion offer for Anglo American this Thursday (25), offering a deal to create the largest copper mining company in the world and causing its rival’s shares to rise 13%.

BHP said it will offer Anglo shareholders 25.08 pounds ($31.39) per share, a 31% premium, and split the London-listed group’s iron ore and platinum assets into South Africa, where BHP, the world’s largest listed mining company, has no activities.

Anglo, which has mines in countries including Chile, South Africa, Brazil and Australia, said its board was reviewing BHP’s unsolicited, non-binding and highly conditional proposal. Under UK takeover rules, BHP has until May 22 to make a firm offer.

If there is a deal, the combination would create a copper mining pool with around 10% of global production. The transaction could also trigger other transactions in the sector, which has seen a wave of mergers and acquisitions as companies revise their portfolios to increase exposure to metals considered essential to the global energy transition.

“This all has to do with copper,” said Ben Cleary, portfolio manager at Tribeca Investment Partners.

“It’s a good deal for BHP. Of course, Anglo is clearly in play now and there is probably room for other companies to join it. This is going to set the whole industry on fire,” said Cleary, whose firm owns shares in both companies.

The offer comes after Anglo, which had a market value of US$37.7 billion at Wednesday’s close, began a review of its assets in February in response to a 94% drop in annual profit and a series of writedowns due to a drop in demand for most of its metals.

BHP, best known for mining iron ore, copper, coking coal, potash and nickel, was valued at around $149 billion.

A deal with Anglo would be BHP’s second major acquisition in about a year, following its purchase of copper miner Oz Minerals in 2023. Its bid adds to a frenzy of global M&A activity, including the purchase of the giant of Newmont gold by Newcrest Mining for $16.8 billion late last year.

A takeover of Anglo by BHP would likely rank among the top 10 mining deals of all time in terms of value and would have the potential to drive Anglo out of the London market, a further blow to an exchange that is struggling to retain large companies and attract IPOs.

But some said BHP would need to offer more to get a deal.

“In our view, it is almost impossible that the premium offered by BHP will be sufficient to attract Anglo management to the transaction,” said Mark Kelly of consultancy firm MKP.

Copper

BHP would gain access to more copper, one of the most sought-after metals for decarbonisation, and potash, which are its key strategic commodities, and more coking coal in Australia.

Anglo has copper mines in Chile and Peru, where BHP also has operations, and their combined production would reach around 2.6 million tonnes per year, which would put it well ahead of US-based Freeport-McMoRan. USA, and the Chilean state mining company Codelco.

Copper prices on the London Metal Exchange have risen 15% this year on demand hopes generated by encouraging macroeconomic data, bets of US interest rate cuts, speculative trading and supply bottlenecks driven by the forced shutdown in December one of the largest open pit copper mines in the world.