BHP swoops on rival Anglo American in £31bn mining megadeal

Mining giant BHP has revealed a potential £31billion offer to buy rival Anglo American in a deal potentially creating the world’s biggest copper miner 

FTSE 100-listed Anglo American – the world’s largest platinum producer – said BHP, its much larger Australian rival, made an ‘unsolicited, non-binding and highly conditional’ all-share bid for the group.

Under the proposal, Anglo American would divest the stakes in its platinum and Kumba iron ore businesses to its shareholders, who will receive £25.08 per share, a premium of around 31 per cent to the firm’s closing share price on Tuesday.

The enlarged business would be responsible for churning out around 10 per cent of global copper output. 

Acquisition deal: Anglo American – the world’s largest platinum producer – has received a takeover offer worth £31billion from fellow mining giant BHP, its much larger Australian rival

For BHP, the takeover would grant it greater exposure to copper, a crucial element in the energy transition, given its use in technologies like electric vehicles, solar panels and wind turbines.

It also said the tie-up would combine the strengths of the two companies in an ‘optimal structure’ and deliver ‘meaningful synergies’ that bolster value and profits for shareholders.  

The Melbourne-headquartered firm, which is listed in both London and Australia,  believes the deal would be ‘attractive to communities where greater financial strength could support further development’. 

BHP now has until 5pm on 22 May to make a concrete acquisition bid in line with City rules or walk away.

‘This announcement does not amount to a firm intention to make an offer and there can be no certainty that an offer will be made,’ it told investors.

Potential deal ‘will send a fresh chill through the City of London’ 

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said a takeover of Anglo American ‘won’t just shake up the mining industry, but will send a fresh chill through the City of London’.

‘There are concerns that if the deal goes through, it could be the tip of the iceberg, and more giants could leave the exchange.’

Investors in Paddy Power owner Flutter Entertainment will vote on 1 May whether to switch its primary listing from London to New York.

Should they approve, Flutter would join building materials supplier CRH, plumbing products specialist Ferguson, and mining group AngloAshanti Gold, which have all recently moved stateside.

Oil supermajor Shell, Britain’s largest listed company by market capitalisation, is also reportedly considering a move to Wall Street just two years after abandoning its dual listing structure. 

Anglo American shares shot up 12.7 per cent to £24.85 on Thursday morning, taking their gains since the year started to around a quarter, while BHP Group shares slid 2.3 per cent to £23.09.

Tough 2023 for mining sector  

Both BHP and Anglo American’s revenues and profits fell significantly during the last financial year owing to declining commodity prices amid slowing global economic growth.

BHP saw its underlying attributable profit plunge to $13.4billion for the year ending June 2023, having made a record $23.8billion in the previous 12 months.

Trading was hit by reduced copper, iron ore, and metallurgical coal prices, as well as higher diesel and electricity costs, and the development of Western Australia’s South Flank mine.

Meanwhile, Anglo American launched a review into its assets after the firm’s annual profits plunged by 94 per cent to $283million in 2023 following a drop in demand for palladium and rhodium.

The London-headquartered group also wrote down $2.4billion on its diamonds and nickel units, including $1.6billion on the value of De Beers.

This post first appeared on Dailymail.co.uk