BHP Group Makes $38.8 Billion Bid for Anglo American

BHP Group has presented a bid to acquire Anglo American for a staggering $38.8 billion, in a deal that would propel the combined company's copper production far beyond that of its closest rivals.

The world's largest mining company has proposed an all-share deal, under which Anglo American would first spin off its majority stakes in South African platinum and iron ore companies to its shareholders, before being acquired by BHP. The total value per share of the non-binding proposal is approximately £25.08, representing a 14% premium over Anglo's closing share price on Wednesday.

BHP produced around 1.2 million tonnes of copper in 2023, while Anglo's production stood at 826,000 tonnes. This would give the combined group a roughly 10% share of the global mining market. The merger would come just ahead of an expected shortage, which many market observers believe will drive prices up sharply.

Anglo American has long been considered a potential target among the largest mining companies, particularly due to its attractive copper operations in South America, at a time when most sector players are eager to increase their reserves and production. However, suitors have been deterred by its complex structure and mix of other base metals, from platinum to diamonds, as well as its significant exposure to South Africa. The company has faced a series of major setbacks over the past year, including a decline in key product prices and operational difficulties that forced it to revise its production targets downward, causing its valuation to plummet and making it vulnerable to potential bidders.

A successful acquisition would represent the first mega-deal between the world's largest diversified mining companies in over a decade. BHP and its main rivals have been on the sidelines for years following a series of disastrous transactions, but the sector is expected to see a wave of mergers and acquisitions. There is plenty of liquidity, and management teams have worked hard to reassure investors that they have learned from past mistakes.