BHP proposes takeover of Anglo American in mining mega-deal

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BHP has proposed a takeover of Anglo American in an all-stock deal that would bring together two global mining companies and rank as one of the industry’s largest transactions in years.

BHP, the world’s largest mining company with a market capitalisation of A$229bn (US$149bn), is seeking to use a takeover of Anglo to expand its portfolio of copper mines, according to people familiar with the matter.

The approach for the 107-year-old company comes as demand for copper is expected to soar because of a global transition away from fossil fuels. The metal is heavily used in renewable energy projects and electric vehicles.

Anglo owns some of the sector’s most coveted copper mines in Peru and Chile, but chief executive Duncan Wanblad has come under intense pressure since December when the company revealed big downgrades to its production forecasts.

Its De Beers diamond division and platinum metals unit have been hit by low prices. Anglo’s UK-listed shares are down by more than a third since the start of last year, putting its market capitalisation at £29bn.

Anglo confirmed it had received “an unsolicited, non-binding and highly conditional” proposal from BHP for an all-share deal and that the board was reviewing it. The company said there was “no certainty that any offer will be made nor as to the terms on which any such offer might be made”.

BHP declined to comment.

Anglo said BHP was proposing that the deal require spin-offs of two Anglo units — Anglo American Platinum, the platinum division known as Amplats, and Kumba Iron Ore. Both are listed in South Africa.

Any takeover offer would be “inter-conditional” on the demergers of both businesses, Anglo said. The proposal is likely to cause controversy in South Africa ahead of the country’s general election in May.

BHP’s proposal to Anglo comes a year after the Melbourne-based mining company completed a A$9.6bn takeover of Australian rival Oz Minerals, which increased its exposure to copper.

The deal started a wave of transactions in the industry, but BHP management has since said it would be disciplined in its approach towards further M&A as it focused on integrating Oz and funding the development of its potash operations.

BHP dropped its primary listing in London in 2022, which simplified its corporate structure to better prepare it for potential consolidation opportunities following divestment of its oil and gas business, which merged with Australia’s Woodside in the same year.

Anglo is among the 25 most valuable companies on the London Stock Exchange, and BHP’s proposal is likely to fuel anxiety over the flight of companies away from the UK capital.

Anglo is being advised by Centerview, Goldman Sachs and Morgan Stanley. UBS and Barclays are advising BHP on the proposal, according to people familiar with the matter.

Bloomberg first reported news that BHP was considering a takeover of Anglo American.