BHP shares sink on $60b Anglo American takeover news

The Big Australian could be on the verge of a major acquisition.

| More on:
Three miners stand together at a mine site studying documents with equipment in the background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BHP Group Ltd (ASX: BHP) shares are under pressure on Friday.

In morning trade, the mining giant's shares are down 4% to $43.42.

Why are BHP shares falling?

Investors have been selling the Big Australian's shares this morning after responding negatively to news that it is looking to make a mega acquisition.

According to an announcement, BHP has made a non-binding, all scrip offer to acquire Anglo American (LSE: AAL) for 31.1 billion pounds (~A$60 billion).

If the deal goes ahead, Anglo American shareholders will receive 0.7097 BHP shares for each share they own in the global miner.

As things stand, no decision has been made on the offer. Anglo American commented that its board is currently reviewing the proposal with its advisers.

Why is BHP wanting to acquire Anglo American?

BHP appears to have made the offer largely due to Anglo American's focus on future facing commodities, and particularly copper.

In fact, the combination of the two companies would create the largest copper miner in the world and be responsible for 10% of global output.

BHP also highlights that the "combined entity would have a leading portfolio of large, low-cost, long-life Tier 1 assets."

It believes these assets would "generate significant cash flows and the combined entity would have the financial capacity to support value adding growth projects at the optimal time, while continuing BHP's commitment to shareholder returns."

As with all good acquisitions, meaningful synergies are expected to be realised from the deal. This includes "from sharing best practice, creating procurement, operational and marketing synergies and eliminating duplication, which would enhance profitability and value for Anglo American shareholders."

What's next?

BHP has warned that there's no guarantee a deal will be concluded. It said:

This announcement does not amount to a firm intention to make an offer and there can be no certainty that an offer will be made. There is no certainty that any form of agreement or transaction will be reached or concluded.

But the good news is that the matter is not expected to drag on for very long. That's because the UK share market requires BHP to either announce a firm intention to make an offer for Anglo American or announce that it does not intend to make an offer by no later than 22 May 2024.

Though, judging by the way BHP shares are falling today, it seems that some investors are not overly keen on the Big Australian pushing ahead with its offer.

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 Scott Phillips.

More on Materials Shares

Man with rocket wings which have flames coming out of them.
Materials Shares

Bell Potter says this speculative ASX stock could rise 200%+

This stock could more than triple in value according to the broker. But it is only suitable for high risk…

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Guess which ASX lithium share just leapt 13% on major financing news!

Investors are bidding up the ASX lithium share on the back of major financing news.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Materials Shares

'Tip of the iceberg': Why this ASX lithium stock has exploded 200% in a week

What is getting investors excited this week? Let's find out.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Market News

Patriot Battery Metals share price rockets 11% on new lithium drilling results

The ASX lithium stock has more than recovered its share price losses from yesterday.

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

How much passive income would I make from 300 BHP shares?

Is this mining giant a good source of income? Let's see what analysts are predicting.

Read more »

Lion holding and screaming into a yellow loudspeaker on a blue background, symbolising an announcement from Liontown.
Materials Shares

Could Liontown shares roar 30%+ higher?

Is this beaten-down lithium developer about to roar higher? Let's see what Bell Potter is saying.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Guess which ASX lithium stock dived 9% after parting ways with Albemarle

A promising agreement has been terminated but management remains confident.

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Novonix share price rockets on new Volkswagen deal

There's some big ASX news out of Novonix today.

Read more »