BHP (ASX:BHP) shareholders approve unification: What’s next for the mining giant?

BHP will become one later this month…

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Two cheerful miners shake hands while wearing hi-vis and hard hats celebrating the commencement of a HAstings Technology Metals mine and the impact on its share price

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Key points

  • BHP shareholders have voted overwhelmingly in favour of its unification
  • Unification expected to complete at the end of the month
  • BHP has been tipped to make new acquisitions post-unification

The BHP Group Ltd (ASX: BHP) share price is falling on Friday morning.

At the time of writing, the mining giant’s shares are down 2.5% to $46.85.

What’s going on with the BHP share price?

The BHP share price is falling today despite the company announcing the completion of the shareholder vote on its unification.

According to the release, BHP shareholders have approved each of the unification resolutions at the BHP Group Limited General Meeting, the BHP Group Plc Scheme Meeting, and the BHP Group Plc General Meeting.

Despite a bit of push back from a small group of investors prior to the vote, shareholders were overwhelmingly in favour of the plans. So much so, approximately 96% to 97% of the votes were in favour of each of the resolutions.

What now?

With the shareholder vote out of the way, arguably the biggest hurdle has now been surmounted.

BHP will now seek approval from the UK courts. A Court Sanction Hearing is expected to take place on 25 January 2022.

After which, if everything goes to plan, the Big Australian expects the unification to complete on 31 January. This will mean its UK-listed shares stop trading at the close of play next Friday, 28 January.

What next?

Once the unification is complete, a number of analysts believe BHP will commence an aggressive merger and acquisition (M&A) strategy.

The team at Morgans expects this to be the case. It has suggested that base metal operations outside Australia could be a target.

Yesterday, the broker said:

Post unification and divestments, we expect BHP to get active on the M&A hunt for larger acquisitions after simplifying its business and freeing up considerable capital resources and management capacity.

If we had to guess, we would expect base metal acquisitions outside Australia as the most likely to hold some appeal (we also do not expect it to be in Africa which BHP exited when it spun off South32 in 2015).

While not the bottom of the cycle by any means, we see it as the next logical step in BHP’s evolution consistent with its overarching strategy.

Morgans has an add rating and $48.60 price target on the company’s shares. This suggests only modest upside for the BHP share price from current levels.

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Motley Fool contributor James Mickleboro 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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