BHP shares charging higher as the clock ticks down on the Anglo American takeover

BHP has less than three days before the clock runs down on its $64 billion Anglo American takeover bid.

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BHP Group Ltd (ASX: BHP) shares are charging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed up 0.8% on Friday trading for $44.89. In morning trade on Monday, shares are swapping hands for $45.87 apiece, up 2.2%.

For some context, the ASX 200 is 0.5% at this same time.

This comes amid another uptick in copper and iron ore prices, and as the clock ticks down on BHP's takeover bid for Anglo American (LSE: AAL). The alarm is set for 5pm United Kingdom time this Wednesday (early Thursday morning Aussie time).

You see, to move past 22 May, UK regulations stipulate the ASX 200 miner must be involved in two-way negotiations with Anglo, in which case they can ask for more time to strike an agreement. Alternatively, BHP could also come out with an unconditional offer free of any conditions.

So, should investors expect BHP shares will encompass Anglo American?

We'll look at what the experts are saying below.

First, a quick recap.

ASX 200 miner eyeing expanded copper footprint

On 26 April, BHP shareholders learned the miner had made a conditional offer to acquire Anglo American for approximately $60 billion.

BHP is primarily interested in Anglo American's copper assets. The red metal is forecast to remain undersupplied for years despite strong demand growth due to the global electrification push. A successful takeover would see BHP become the world's top copper producer.

However, Anglo American's board swiftly rejected the initial offer as undervaluing the company's growth prospects.

BHP shares made headlines again on 14 May, when the miner returned with an improved takeover bid valued at some $64 billion.

This too was rejected by the Anglo American board.

In the days that followed, investors learned that Anglo American's CEO Duncan Wanblad is now planning to divest its platinum and diamond businesses and sell its Queensland-based coal mines, potentially to ward off BHP's takeover attempt.

BHP has also flagged its intentions to likely sell off some of Anglo's assets, like its platinum and iron ore projects in South Africa.

So, with the clock ticking on a momentous acquisition, what can ASX 200 investors expect?

What's ahead for BHP shares and Anglo American?

Commenting on the prospect of BHP shares enveloping Anglo American's assets, Josh Gilbert, market analyst at eToro said, "We might see a third and final offer from the world's largest miner."

But that's likely to be the final deal.

"BHP CEO Mike Henry has already expressed his frustration at a deal not being met, so the next offer is likely to be the last," Gilbert said.

He noted that despite a difficult past few years "with poor acquisitions, weaker commodity prices, and operating failures", Anglo American "has quality copper mines that the competition wants".

And it's relatively cheap compared to many of its peers.

According to Gilbert:

The business trades at 11 times forward price to earnings, in line with its long-term average and lower than broader markets, showing there isn't much optimism priced into shares right now. 

The bottom line is that this acquisition still may not come to fruition. BHP needs to come to the table with a better offer. However, savvy investors will know that if copper prices keep rising, China's housing crisis improves, and BHP can stay financially disciplined, the business will likely be in a better position years from now. 

Liberum Capital says there are three ways that BHP shares will acquire Anglo American. All of which come with a cost.

According to Liberum (quoted by The Australian Financial Review):

We see three ways to get it over the line 1) a big premium – market talking up at least £30/share, but requires another 35 per cent bump in the offer 2) a radical change in structure – perhaps a BHP/Glencore joint bid for all assets 3) more time – if Duncan [Wanblad] doesn't deliver on his plans, BHP's offer will likely stay on the table.

Liberum added that regardless of the short-term outcome, Anglo American shares and BHP shares are now closely linked:

Anglo American shares will be tied to BHP's performance going forward and if … Wanblad fails to deliver material progress on the proposed restructuring plans over the next 18 months, or if Anglo American shares do not outperform BHP, then shareholders will be looking for BHP to come back with an offer.

BHP shares are up 2% over the past year.

Motley Fool contributor Bernd Struben 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.

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