BHP Group Offers $40B for Anglo American

BHP Group, the Australian mining giant, has made a substantial bid of nearly $40 billion to acquire its U.K.-based rival, Anglo American, in what could potentially become a transformative deal within the global mining industry. The offer, which was unveiled on Thursday, is structured as an all-share proposal and values Anglo American at approximately $38.9 billion (£31.1 billion). This valuation represents a significant premium of around 14% over Anglo American’s closing share price on the preceding day.

The proposal from BHP Group comes at a time when copper prices have been experiencing a notable upswing, climbing more than 17% since the start of the year. This surge in copper prices has been fueled by a growing demand for the metal, particularly in industries such as electric vehicles and renewable energy, where copper is a critical component. The acquisition of Anglo American would significantly bolster BHP Group’s position in the copper market, potentially making it the world’s largest copper mining company.

In response to the offer, Anglo American has indicated that its board is currently reviewing the proposal. However, the deal is not without its conditions. As part of the acquisition agreement, Anglo American would be required to spin off two of its South African units—Anglo American Platinum and Kumba Iron Ore. This condition adds a strategic dimension to the deal, as it would allow BHP Group to focus on its core mining operations while also potentially unlocking additional value from the spun-off units.

Following the announcement of the bid, the stock prices of both companies reacted strongly. Anglo American’s London-listed shares surged by nearly 13% to $31.2 (£24.8), reflecting investor optimism about the deal. In contrast, BHP Group’s U.K.-listed shares declined by 3.51%, indicating some concerns among investors about the potential challenges and risks associated with the acquisition.

If the acquisition is successful, the combined entity would account for approximately 10% of the global copper output, a significant market share that could further strengthen BHP Group’s position in the industry. This move is in line with BHP Group’s broader strategy of expanding its presence in key markets and consolidating its position as a leading player in the global mining sector.

This bid marks BHP Group’s second major acquisition in the past year, following its acquisition of Australian mining firm OZ Minerals in a $6.27 billion (A$9.6 billion) deal. The acquisition of OZ Minerals was also driven by the strategic importance of copper to BHP Group, highlighting the company’s commitment to this critical metal and its long-term growth prospects.

BHP Group’s current market capitalization stands at a staggering $149.68 billion (A$229.39 billion), underscoring its status as the world’s most valuable mining firm. This acquisition bid further reinforces BHP Group’s position as a key player in the global mining industry and underscores its commitment to driving growth and value creation for its shareholders.