BHP ready to buy Anglo American for $38.8 billion
The world’s largest publicly traded mining company BHP Group has made an offer to buy its rival Anglo American, valuing it at $38.8 billion. Anglo American has confirmed receipt of the offer and is currently reviewing it. If the companies reach an agreement, the deal would create the world’s largest copper producer and is likely to trigger a wave of mergers and acquisitions in the mining industry. The deal itself could be among the ten largest deals in the history of the industry.
Australian BHP Group (capitalization – $148 billion) is offering 0.7097 BHP shares for one Anglo American share (capitalization – $37.7 billion). Thus, BHP values one Anglo American share at $31.4, including a premium of 31%. Under the terms of the proposal, Anglo American would spin off its South African platinum and iron ore operations, Anglo American Platinum and Kumba Iron Ore. BHP believes the proposed deal would combine the strengths of the two companies into a single, optimal structure. “Anglo American would bring its assets and long-term growth potential. BHP would bring its high-margin, profitable assets and growth opportunities, with its greater cash flow and stronger balance sheet,” BHP said in the proposal.
According to many analysts, the deal is a win-win for BHP, giving it greater access to copper and potash, which are in high demand on the global market. The combined company would be able to produce about 2.6 million metric tons of copper per year, ahead of all other competitors. Copper prices have already risen 15% this year, reaching $10,000 per ton on the London Metal Exchange. BHP Group shares are down 0.6% in Australian trading today. Anglo American shares soared 13.3% in London trading.