Sydney (AFP) – Australian mining giant BHP said Thursday it has made a $38.8 billion takeover bid for British rival Anglo American, a colossal deal with the potential to fundamentally reshape the sector.
Both companies have been wrestling with the transition away from traditional money makers such as gas and coal, increasingly eyeing opportunities to mine metals and critical minerals.
BHP said in a statement to the London Stock Exchange it was interested in Anglo American’s “world class copper assets”, which include operations in Peru and Chile. The mineral is critical to the world’s transition to renewable energy.
“The combination would bring together the strengths of BHP and Anglo American in an optimal structure,” the statement said, adding that the British group “would bring its assets and long-term growth potential”.
Neil Wilson, analyst at financial services firm Finalto, described it as a “monster” deal that “would create the world’s largest listed miner and copper producer”. Anglo American stocks jumped 13 percent in London trading. Market reaction was muted in Australia due to a public holiday.
“Anglo has not had a great year -– the rally …has erased the losses of the last 12 months,” Wilson said. Anglo American confirmed that its board was “reviewing” an offer from BHP but did not disclose the price. “There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made,” Anglo American said in a statement. “Pending any further announcements Anglo American shareholders should take no action.”
– ‘Big Australian’ –
Nicknamed the “Big Australian”, BHP claims to be the largest mining company in the world with a market value of around $148 billion. Its longtime rival Anglo American has a market value of about $36 billion.
BHP said it was offering the UK group £25.08 per share in the deal. BHP’s offer would first hinge on Anglo American splitting off its platinum and iron ore holdings in South Africa. Such a move “could be politically sensitive”, Wilson said.
Anglo American announced this year plans to cut thousands of jobs across its platinum business, which was hit hard by low metal prices.
Dan Coatsworth, investment analyst at AJ Bell, said Anglo American was “a sitting duck” after its shares sharply fell last year. “That provided an opportunity for a larger rival to pounce on the business, taking a long-term view that its assets have considerable value and any short-term operational issues can be fixed,” he said.
BHP has signalled in recent years its growing appetite for copper, an increasingly in-demand metal that is playing a key role in global energy transitions. The International Energy Agency lists copper — commonly used in electrical wiring — as of “high importance” for the development of solar panels, electricity networks, electric vehicles and rechargeable batteries. BHP completed the $6 billion acquisition of Australian copper miner Oz Minerals in May last year.
– Crucial copper –
Australian renewable energy finance expert Tim Buckley was not convinced the takeover bid was a wise move. “I question what the takeover brings aside from complexity,” he told AFP before the bid was confirmed.
Both BHP and Anglo American have been hit by global downturns in nickel, which is essential for the manufacture of stainless steel and rechargeable batteries.
BHP reported an 86 percent slump in its half-year net profit this year, caused by a write-down of its nickel assets and costs related to a 2015 Brazilian mining disaster. Nickel prices have dropped about 40 percent in the past year as new refining techniques enabled low-quality metal from Indonesia to be used instead for batteries.
© 2024 AFP
