BHP (ASX:BHP) share price defies broader market sell-off to edge higher. Here’s why

What’s the go with BHP shares?

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The BHP Group Ltd (ASX: BHP) share price is pushing upwards on Monday morning while the broader market falls.

At the time of writing, the diversified miner’s shares are swapping hands for $36.64, up 1.52%. In context, the S&P/ASX 200 Index (ASX: XJO) is down 0.04% to 7,454.1 points.

What did BHP announce?

Investors are buying up BHP shares following the company’s latest update to the ASX.

According to its release, BHP advised it has signed a deal to offload its interest in BHP Mitsui Coal (BMC). The latter has a controlling stake in metallurgical coal mines, the South Walker Creek and Poitrel coal mines.

The share sale and purchase agreement will see the world’s second largest miner sell its 80% interest to Stanmore Resources.

The total purchase price is up to US$1.35 billion. This consists of US$1.1 billion in cash, another US$100 million in cash six months after completion, and a possible US$150 million payout in 2024 linked to prices.

For the sale to go ahead however, a number of conditions must be met along with regulatory approvals. Should certain conditions not be satisfied, Stanmore Resources will need to pay a break fee.

Completion of the deal is expected to happen sometime in the middle of the 2022 calendar year. Up until then, BHP will closely work with Stanmore Resources to bring up to speed and ensure a smooth transition.

BHP president of minerals Australia, Edgar Basto commented:

As the world decarbonises, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions.

The net proceeds will be put towards maximising shareholder value, whether this be future dividends, share buybacks or both.

About the BHP share price

Over the past 12 months, BHP shares have gained 5%, but have lost almost 15% in 2021. The company’s share price trekked higher up until August, before plummeting to November 2020 lows.

Based on today’s price, BHP presides a market capitalisation of roughly $106.47 billion and has approximately 2.95 billion shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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