BHP Unveils £31bn Mining Megamerger Proposal with Anglo American

BHP, the world’s largest mining group, has proposed a groundbreaking £31 billion takeover bid for Anglo American. If successful, the merger would mark one of the largest transactions the industry has witnessed in recent years.

BHP announced on Thursday its proposal of 0.7097 BHP shares for each Anglo share, accompanied by shares in two South African units earmarked for spin-off to Anglo shareholders. This strategic maneuver aims to bolster BHP’s foothold in the copper market, a mineral pivotal in the global shift towards decarbonization initiatives.

With copper demand projected to surge due to increased reliance on renewable energy and electric vehicles, BHP’s ambitious bid seeks to position itself as the preeminent force in copper production, as reported by the Financial Times. The proposed merger would catapult BHP to the pinnacle of the industry, making it the world’s largest copper producer, according to assessments by RBC.

The allure of Anglo American lies in its prized copper assets in Peru and Chile — although recent challenges, including significant production forecast downgrades, have weighed on the company’s performance. Anglo CEO Duncan Wanblad has faced mounting pressure amidst struggles in its De Beers diamond division and platinum metals unit, exacerbated by plummeting commodity prices.

The bid has injected a surge of optimism into Anglo’s shares, which rose by 13 percent to £24.89 in early London trading, reflecting newfound confidence in the company’s potential under BHP’s stewardship. Prior to the bid announcement, Anglo’s shares had witnessed a downward spiral, shedding more than a third of their value since the previous year’s inception.

As discussions unfold, BHP’s proposal also entails the spin-off of two of Anglo’s South African units — Anglo American Platinum (Amplats) and Kumba Iron Ore — a move designed to streamline operations and unlock additional value for shareholders.

The Financial Times