LONDON, UK: BHP Group has confirmed its intention to pursue a historic merger with Anglo American. On April 16, 2024, BHP proposed an all-share offer that would see Anglo American shareholders receive 0.7097 BHP shares for each Anglo American share, alongside a pro-rata distribution of shares in Anglo American Platinum Ltd and Kumba Iron Ore Ltd.
The proposal, which hinges on a scheme of arrangement, values Anglo American’s share capital at a staggering £31.1 billion. This reflects a premium of approximately 31% over the market value of Anglo American’s unlisted assets, and a 19% premium to the broker median net asset value of Anglo American excluding its platinum and iron ore interests.
BHP’s proposal is designed to align with its long-term value strategy and robust capital allocation framework, promising substantial immediate value to Anglo American shareholders. The merger would create a powerhouse with a focus on iron ore, metallurgical coal, and future-facing commodities like potash and copper, poised to deliver significant cash flows and financial capacity for growth projects.
For BHP shareholders, the merger promises increased exposure to commodities of the future through Anglo American’s copper assets, complementing BHP’s existing portfolios and providing valuable growth options and geographic diversification.
However, the announcement is not a definitive commitment to an offer, and the possibility remains open that no agreement will be reached. BHP has until 5:00 p.m. on May 22, 2024, to announce a firm intention to make an offer or to withdraw, a deadline that can be extended with regulatory consent.
The proposed merger is subject to due diligence and customary conditions, and BHP reserves the right to amend the terms of the offer. This includes the possibility of a takeover offer as an alternative to the scheme of arrangement, underscoring BHP’s disciplined approach to mergers and acquisitions.
Anglo American has responded by granting reciprocal due diligence to BHP, with the potential combination promising to deliver meaningful synergies and enhanced profitability for shareholders. The merger would also retain BHP’s global listings, allowing Anglo American shareholders to benefit from BHP’s substantial share trading liquidity.
As the mining industry watches closely, the proposed merger between BHP and Anglo American stands as a testament to the dynamic nature of the sector and the ongoing pursuit of strategic growth and shareholder value.
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