In Short
- Bhp makes a record-breaking bid of almost $40 billion to acquire anglo american, setting the stage for the largest mining merger in history.
- The bid focuses on gaining access to significant copper reserves, reflecting the growing demand for copper in various industries, including renewable energy.
- Market reactions and potential impacts on london’s stock exchange are key areas of interest as the mining sector braces for transformative changes.
TFD – Delve into the seismic shift in the mining industry as BHP unveils a historic bid to acquire Anglo American, igniting a frenzy in the market. Discover how this mega-merger could reshape the landscape of mining and investments globally.
In what would be the largest mining merger in history, mining behemoth BHP has put in an almost $40 billion bid to acquire competitor Anglo American in the UK.
In a statement released on Thursday, BHP stated that the total value of Anglo American shares was £31.1 billion ($38.9 billion), or £25.08 ($31.40) per share. It further stated that if the transaction is successful, BHP will have more access to copper reserves.
BHP’s proposed offer was turned down by Anglo American on Friday, the company saying that it “significantly undervalues” the business. The Australian mining company BHP has until May 22 to submit a formal offer, and they may yet submit a larger one.
The head stock analyst at Hargreaves Lansdown, Sophie Lund-Yates, stated, “There’s every chance BHP will come back to the table.”
Copper is a necessary component of electrical grids and various renewable energy sources, such as solar panels and electric cars. It’s also in great demand: At about $10,000 per metric ton, the price of copper on the London Metals Exchange has increased by over 15% this year, marking the highest level in nearly two years.
Copper is the primary focus of the potential acquisition, according to William Tankard, lead analyst of base metals at CRU Group, who spoke with CNN.
Based on study by CRU Group, BHP is the world’s second-largest producer of mined copper, while Anglo American ranks ninth. According to Tankard, their combination would draw the attention of competition authorities worldwide.
According to Dealogic data, the deal would have been worth more than the $38.3 billion that commodities major Glencore paid to acquire Switzerland’s Xstrata in 2012. This is because of the parameters of BHP’s rejected bid. Additionally, in terms of value, it would be the largest merger or acquisition in the mining sector since Dealogic started gathering data in 2004.
Anglo American’s stock dropped 0.5% in early trading on Friday to £25.48 ($31.89), following a 16% increase the day before on news of BHP’s offer. The Australian business’s shares ended Friday’s trading 4.6% down.
BHP has long sought to increase its copper holdings. The Melbourne-based business purchased Oz Minerals, an Australian rival, a year ago in order to increase its access to copper and nickel.
According to a statement made at the time by company CEO Mike Henry, BHP planned to “meet increasing demand for the critical minerals needed for electric vehicles, wind turbines, and solar panels” by acquiring Oz.
Copper was dubbed “the ubiquitous future-facing commodity” by Tankard of CRU Group. “Cutting copper is a common theme, whether we’re talking about EVs, data centers, or general electrification.”
Unfavorable news for London?
One of the biggest firms listed on the London Stock Exchange is Anglo American, and BHP’s strategy should allay worries about a market exodus from London.
Shell’s CEO, Wael Sawan, told Bloomberg last month that he thought the energy giant was “undervalued” due to its London listing, drawing parallels with its much larger competitors, Exxon Mobil and Chevron, which are all listed in New York.
This fueled rumors that the £186 billion ($232 billion) oil giant might move its headquarters from London to Wall Street, which would be a catastrophic blow to the primary stock exchange in Britain. In recent years, a number of businesses have already relocated their major listings or decided to go public in New York.
The head of money and markets at Hargreaves Lansdown, Susannah Streeter, wrote in a note on Thursday that the Anglo American deal “will send a fresh chill through the City of London.” “There are worries that more giants may leave the exchange if the deal goes through. This could just be the tip of the iceberg.”
Correction: In a previous version of this story, BHP was incorrectly ranked as the largest producer of mined copper worldwide.
Rob North provided reporting assistance. Further details have been added to this story.
Conclusion
The mining world is abuzz with BHP’s audacious bid for Anglo American, signaling a monumental shift in the industry. As copper demand surges and market dynamics evolve, this historic merger could redefine mining landscapes globally. Brace for an era of transformation and growth in the mining sector.
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