There’s takeover excitement in the mining world this morning after Australia’s BHP made a takeover approach for smaller rival AngloAmerican.
The deal, if completed, would be one of the largest in the sector for years, and create the world’s biggest copper miner, producing about 10% of global output, says Reuters. Copper hit a two-year high earlier this month, with traders betting that supply will struggle to keep up with demand.
Anglo confirmed overnight that it had received an “unsolicited, non-binding and highly conditional” all-share buyout proposal from BHPGroup, which it is examining. The proposal is conditional on Anglo first splitting off its South African platinum and iron ore units, suggesting BHP is primarily interested in Anglo’s copper resources.
Anglo says: "The board is currently reviewing this proposal with its advisers. There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made. Pending any further announcements Anglo American shareholders should take no action. A further announcement will be made as and when appropriate."
Anglo has been seen as a potential takeover target since late last year, when it warned that production had been weaker than expected. Shares are down about 10% over the last 12 months.
BHP’s interest in acquiring Anglo raises fresh concerns about an exodus of UK firms from London.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains: ‘’The buyout offer from BHP, the world’s largest publicly listed miner, for Anglo American, won’t just shake up the mining industry, but will send a fresh chill through the City of London.
"There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange. It comes hot on the heels of speculation that Shell might up sticks and leave for New York, rumours that Ocado may be considering leaving for the Big Apple, and follows the crushing disappointment of homegrown chip designer Arm choosing the Nasdaq over the FTSE 100."
BHP’s pursuit of Anglo comes on a busy morning for corporate news in London, after Barclays bank has reported a 12% drop in pre-tax profits for the last financial year.
The agenda • 9am BST: European Central Bank’s economic bulletin • 11am BST: CBI’s distributive trades survey of UK retailers • 1.30pm BST: US GDP report for Q1 2024 • 3pm BST: US pending home sales data for March
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