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MINING M&A: BHP CONSIDERING ACQUISITION OF ANGLO AMERICAN BHP is considering a potential takeover of Anglo American, people with knowledge of the matter said, in what would rank as one of the year’s biggest deals. The mining giant has recently been evaluating the possibility of a bid for London-listed Anglo American, the people said, asking not to be identified discussing confidential information. Shares of Anglo American have fallen 12 per cent over the last 12 months, giving the company a market value of £27 billion ($23 billion). BHP, which trades in London and Sydney, has a market value of about $230 billion. Deliberations are at an early stage and there’s no certainty that BHP will decide to proceed with a deal, the people said. Representatives for BHP and Anglo American declined to comment. Anglo American reported a steep fall in 2023 profit and lowered its dividend after a slump in key commodities it produces. In recent months, it has written down the value of its De Beers diamond unit by $1.6 billion and dramatically slashed its copper production goals. MY TAKE: • From the outside, this transaction doesn't look to make sense for BHP (my personal shareholder perspective). • Whilst the most recent BHP acquisition, of OzMin made a lot of sense, and created a new Copper SA province, the Anglo deal doesn't appear to make a lot of sense. • A cursory review of the latest Anglo results (https://lnkd.in/gZbZ3Ji9) indicate, just over half of Anglo's earning are from met coal and iron ore, with contributions from PGMs and nickel. • The future growth project, polyhalite also continues to be a money pit, and never made sense, and certainly doesn't make sense in the BHP portfolio, given the scale of Jansen, well advanced with expansion plans already well afoot. • Which begs the question, why? • The only interesting part of the portfolio, is copper, particularly Quaellaveco in Peru, which required investment equivalent to a quarter of Anglo's current market cap. • It makes as much sense for BHP to acquire Anglo as it does for it to acquire South32, which was used to hive-off non-core assets acquired by BHP over the years. • It looks like the investment bankers have had a quiet spell and dreaming up deals that may make sense on paper, but not in the long term interests of BHP. • I hope Mike at the helm of BHP maintains his discipline and rejects the senseless M&A that was so value destructive in the past. Please just focus on growing the existing BHP copper business and nail Jansen. • I'd much prefer BHP to overpay for 50% of Quaellaveco (to bail out Anglo), than deal with all the distractions that would come with a tilt at Anglo. #mining #copper #ironore #nickel #coal #pgm #merger #transaction Money of Mine - looking for the hot take . . . on what you guys think of this potential transaction. A deal for a deals sake?

Is BHP gearing up for a renewed bid for Anglo American? ⛏️ BHP CEO Mike Henry’s recent visit to South Africa has reignited speculation around a potential renewed bid for Anglo American. With Anglo's ongoing restructuring and BHP’s focus on expanding its copper assets, this deal could reshape the global mining landscape. The question remains—can BHP navigate South Africa’s political landscape and win over key shareholders like the Public Investment Corporation? 🔗Read more: https://ow.ly/yhmM50TTbvO #BHP #AngloAmerican #MiningNews #GlobalMining #MMTmagazine

Days after BHP Group failed to secure the $49 billion takeover of smaller rival Anglo American Plc, investors have one message for Chief Executive Mike Henry — keep your cool. https://lnkd.in/gsi-tjbV BHP argues it showed restraint in the battle for Anglo, a welcome attribute in a sector notorious for burning billions of dollars on underwhelming projects and ill-timed acquisitions just over a decade ago. The question now is whether that discipline holds, even with all mining bosses gunning for more volume in copper, the single most coveted metal as the energy transition accelerates. The Anglo tilt was an ambitious bid to transform the world’s largest miner into the top global producer of the red metal in one fell swoop. Having faltered, people familiar with the matter say BHP won’t rush into more — at least in part because there are few alternatives when it comes to copper. Major deposits are increasingly rare and costly to develop, while the most obvious acquisition targets are effectively out of reach, either because of ownership or valuation. Anglo comes back into view in six months time under UK Takeover Panel rules, and BHP will wait until then and reconsider its options, said the people, who declined to be named as the discussions are not public. The battle over the past weeks has mesmerized the mining sector. A tussle between two of the industry’s largest players, it would have been the most significant tie-up in over a decade — and one of the most complex to boot. Under BHP’s all-share proposals, Anglo would have had to spin off its South African platinum and iron ore assets, before then being purchased by the Australian mining giant Anglo’s board rejected the repeated offers, and opted instead for its own turnaround plan Rival Suitors The trouble for BHP is that down the line other bidders will also step in, including rivals Rio Tinto Ltd., and Glencore Plc. Neither is perfectly positioned today, but both may well be later this year, as investors and executives warm to the idea of deals and Glencore completes its acquisition of Teck’s steelmaking coal business. All are eager to bump up copper production. Industry bankers and executives have reviewed deals centered on the industrial metal for years, running the rule over copper-heavy like Antofagasta Plc, First Quantum Minerals Ltd and Freeport-McMoRan Inc — but either family owners or expensive valuations have held back approaches, especially in an industry where shareholders remember past profligacy only too well.

#BHP's Bid for #Anglo American: Can the mining mega-combination go ahead? #BHP is one of the world's largest mining companies, headquartered in Melbourne, Australia and specializes in the extraction and production of commodities like iron ore, coal, copper, and petroleum. Annual Revenue: ~$65.1 billion #Anglo American, based in London, is a major global mining company with operations in diamonds, copper, platinum, iron ore, and coal. Annual Revenue: ~$32.3 billion BHP's proposed £38.6bn takeover of Anglo American highlights several key M&A principles: Strategic Negotiation Despite Anglo's initial rejections, ongoing talks reflect strategic negotiation tactics. BHP's persistence with increased offers shows the importance of finding a middle ground that satisfies both parties. Valuation and Deal Structure BHP's offer of £31.11 per share (up from £25/share) addresses the valuation concerns. However, the unconventional demand for Anglo to demerge its South African units adds complexity, reflecting the critical balance between deal value and structure. Stakeholder Management Engaging stakeholders, including shareholders and regulatory bodies, remains pivotal. Anglo's serious concerns about the demerger risks and regulatory implications underscore the need for thorough stakeholder alignment. BHP may be underestimating the costs, time, and risks involved in simultaneously changing ownership and demerging two South African units of Anglo-American. Vitol's acquisition of Engen’s gas stations in South Africa took over 400 days to hammer out with the authorities and added roughly 5 to 10 per cent to costs above the acquisition price. Potential Synergies and Risks The proposed merger aims to create significant synergies, particularly in copper mining. However, the risks associated with demerging units and regulatory hurdles in South Africa highlight the challenges in realizing these synergies. Future Outlook and Market Reaction BHP’s shares dropped almost 3 per cent on Wednesday, while Anglo’s largely held on to their 25 per cent gains of the past month, indicating a higher likelihood of the combination happening. The market's response suggests optimism, but both companies must navigate the remaining complexities to finalize the deal. Your Thoughts? What do you think are the key factors for the success of this merger? Do you think that #Glencore may enter the fray or Anglo American Board may recommend a better offer?

THE possibility that BHP Group’s takeover proposal for Anglo American last month could trigger a fresh wave of M&A activity in the mining sector raises the question as to whether mining valuations are in danger of overheating. Yes, according to Investec Securities. The bank comments in a recent report that BHP’s preference for shares over cash is a sure-fire signal. “All share acquisitions traditionally indicate a sector that is getting expensive relative to the broader market,” says mining analyst Nkateko Mathonsi. A cash or cash and share offer would “not necessarily be well received by the market”, she adds. All eyes then on what BHP does next, having had a “how about it” proposal kicked back by Anglo as too cheap. The Australian firm does not want to revive memories of its “deal fever” reputation picked up under previous management. Having said this, much is at stake. Its Anglo deal has been at least four years in the making and copper is the group’s preferred commodity. It’s worth noting that in the absence of organic expansion, BHP’s copper production falls from around 2027, according to BMO Capital Markets research cited in a Bloomberg article.

Reshape? That's an understatement. This offer has could create a truly giant miner (10+% of global Cu production) and is a clear reminder that mining M&A is back big time!   The offer brings back memories of the industrially transformative deals from 2002-2007 and 2010-2012 where BHP, Rio, and Glencore all grew to be the major mining conglomerates they are today. Are we now on the edge of similarly significant industry consolidation and growth?   Amidst the excitement, an intriguing subtext exists… The 'unbundle' demands concerning Amplats and Kumba add complexity, as might the as-yet-unclear position of large Anglo shareholders in South Africa. Nevertheless, this is undeniably big news with global implications. Who might join this party and offer the next bid? Exciting times ahead!

Round three — Anglo prepared to talk after rebuffing BHP’s third $49-bn offer: Anglo American has opened the doors to talks with BHP after rebuffing a third offer from its suitor. This suggests that the target is under shareholder pressure to talk, and the Public Investment Corporation, which holds shares in both, outlined its preferences shortly before the companies released their statements.  Anglo American is ready to talk turkey with BHP, raising the prospect that the biggest mining merger in over a decade may yet come to fruition. A month of riveting drama in the mining world is set for its next stage, after Anglo said on Wednesday it had rejected BHP’s latest offer made on Monday, but extended the Pusu — merger and acquisitions lingo for “put up or shut up” — deadline by a week. This effectively means it’s open to talks with the world’s biggest mining company. The deadline is now 29 May, the day South Africa holds its general elections, so the Pusu could get pushed out again. The latest offer would raise the stake of Anglo shareholders to 17.8% in the combined company from 14.8% in the first proposal. This would be an all-share deal, focused squarely on Anglo’s coveted copper assets in Latin America. But the structure remains the same: Anglo would first need to offload its main South African assets, Anglo American Platinum (Amplats) and Kumba Iron Ore. Since BHPs initial proposal, Anglo has said it intends to hive off Amplats, along with diamond giant De Beers and its steel-making coal assets. So part of BHP’s proposed structure is in Anglo’s game plan, but the target has said the offer creates a “complex process… likely to take 18 months or more to complete and carries significant execution and completion risks relating to both value and time.” It must be said on this front that Anglo’s disposals will likely take a similar amount of time. “BHP’s revised proposal will offer immediate value for Anglo American shareholders and allow them to benefit from the long-term value generation of the combined group,” BHP CEO Mike Henry said in a statement. Henry also said the new offer ratio was “final”. But it’s not set in stone, as BHP is open to Anglo’s board recommending a higher bid or BHP upping its offer if a rival steps in with another proposal. There have been reports that Glencore is also weighing up a move on Anglo. Pusu pressure Pointedly, Anglo’s extension of the Pusu suggests its shareholders are applying some pressure. One point of contention is the valuation, but that can be worked out. “The Final Offer Ratio represents a total value of £31.11 per Anglo American share based on the closing share prices of BHP as at 22 May 2024 and Anglo Platinum and Kumba as at 21 May 2024,” BHP said. Anglo maintains the offer values it rather less, based on averages over a longer time frame. “On the basis of the 30-day and 90-day volume weighted…

Shareholders of BHP and Anglo American anticipate another improved bid from BHP before the regulatory deadline, despite Anglo’s restructuring plans. Anglo intends to focus on copper and iron ore, selling off other assets, in response to BHP’s bid. Investors foresee potential for a revised offer from BHP, expecting a 5% increase, signaling uncertainty in Anglo’s strategy. BHP’s CEO emphasizes the importance of shareholder input in determining the best course. Anglo’s refusal to engage directly with BHP is seen as aggressive and potentially unsettling for its own shareholders. This standoff could impact Chile, a major copper producer, by influencing global market dynamics and investment sentiment in the mining sector.

"The world's largest mining company, BHP Group, has made a takeover approach for rival Anglo American, a move that could spark the biggest shakeup in the industry in over a decade. Anglo American said late on Wednesday that it had received an unsolicited all-share merger proposal, after Bloomberg reported that BHP was considering a potential offer. Anglo added BHP’s proposal was conditional on the company first splitting off its South African platinum and iron ore units. If successful, the transaction would mark a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in the past couple of years under Chief Executive Officer Mike Henry. It appears tailored to expand BHP's copper footprint, highlighting how the red metal has become a priority for the mining sector, and the move could flush out other suitors aiming to do the same. "If BHP does indeed continue to pursue this deal, we would be surprised if other bidders do not emerge," analysts from Jefferies LLC led by Christopher Lafemina said in an emailed note. A bid that values Anglo at $42.6 billion — a 28% premium based on its latest share price — might get a deal "across the finish line," they said. Anglo American has long been viewed as a potential target among the largest miners, particularly because it owns big South American copper operations at a time when most of the industry is eager to add reserves and production. However, suitors have been put off by its complicated structure and mix of commodities, and especially its deep exposure to South Africa. BHP produced about 1.2 million tons of copper in 2023 on an equity basis, while Anglo's output was 826,000 tons. That would give the combined group roughly a 10% share of global mine supply. Jefferies said antitrust issues "would likely be a problem" for the deal since governments consider copper a critical mineral."

Anglo American rejects BHP takeover deadline plea: UK mining giant Anglo American has rejected its rival BHP’s plea to extend the looming deadline for a final offer on a proposed £39bn merger. Earlier on Wednesday, Australian BHP attempted to ease concerns about its plans for Anglo American’s business in South Africa ahead of elections in the country. It made commitments that included job security for employees there, but said it needed an extension on talks “to allow further engagement” on the plans. However, Anglo’s decision means the mega-merger is in jeopardy unless BHP changes its offer before 17:00 on Wednesday. The pair have been wrangling over the deal since Anglo American rejected BHP’s first takeover approach, a £31.1bn offer, at the end of April. Anglo then rejected BHP’s second £34bn offer at the start of May and its third offer of £38.6bn last week, but some Anglo shareholders urged the company to keep negotiating. Anglo and the South African government have also cited concerns about BHP’s proposal to spin off the South African businesses. After rejecting BHP the third time, Anglo announced its own plans to break up its business by selling or spinning off major parts of the firm including its De Beers diamond operation and its platinum division, with a view to focusing on key areas such as copper, premium iron ore and crop nutrients. BHP has made a series of proposals it said it would keep for at least three years to ease Anglo’s concerns. These include maintaining current staff levels at Anglo’s Johannesburg office, keeping BHP listed on the Johannesburg Stock Exchange, and sharing the cost of increased South African employee ownership “if required to secure regulatory approvals”. However, Anglo said that BHP’s offer still includes “the same highly complex and unattractive structure as the proposals previously rejected on 26 April 2024 and 13 May 2024”. Speaking to the BBC’s Today programme on Wednesday before Anglo’s update, Ben Davis, head of mining at analyst Liberium Capital, said there was “not really much meat on the bones” of BHP’s proposals. He added that they amount to a continuation of its commitment to South Africa rather than an improvement. He also expressed sadness about the prospect of another listed UK company being snapped up by an overseas business. “To see [Anglo American] gone from the London Stock Exchange would certainly be a loss,” he said. The post Anglo American rejects BHP takeover deadline plea appeared first on The Namibian.