BHP proposes £31bn takeover of Anglo American in mining mega-deal

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BHP has proposed a £31bn takeover of Anglo American that would bring together two global mining companies and rank as one of the industry’s largest transactions in years.

The world’s largest mining group said on Thursday that it had offered 0.7097 BHP shares for each Anglo share, as it sought to expand its portfolio of copper mines, a mineral for the decarbonisation of the global economy. Anglo shareholders would also receive shares in two South African units that would be spun off. BHP said its offer valued each Anglo share at £25.08. Anglo shares rose 13 per cent to £24.89 in early trading in London, giving the company a market capitalisation of £30.5bn. 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. The deal would elevate BHP to rank as the world’s largest copper producer, up from the third largest currently, according to RBC. The combined group would generate more than 2mn tonnes of copper per year, about 10 per cent of global mined supply. BHP said it would increase its “exposure to future facing commodities through Anglo American’s world class copper assets”. A tie-up involving the two listed groups would be one of the most influential in the mining sector since Glencore’s acquisition of Xstrata in 2013.

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. Anglo said it had received an unsolicited bid from BHP and was reviewing it. Its De Beers diamond division and platinum metals unit have been hit by low prices. The company’s London-listed shares had fallen by more than a third since the start of last year before rising on the bid news.

Anglo American has sounded out potential buyers of De Beers including Gulf sovereign wealth funds, luxury houses and wealthy individuals in recent weeks, according to two people familiar with the matter. Shares in BHP, whose primary listing is in Sydney and has a market capitalisation of A$229bn (US$149bn), fell 0.6 per cent to A$45.23 on Thursday. Anglo said that as part of any deal, BHP was proposing 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 and account for about £10.2bn of the value under the BHP proposal.