BHP share price marching higher amid fast approaching $75 billion takeover deadline

BHP is still in negotiations over its acquisition proposal for Anglo American.

| More on:
Three miners looking at a tablet.

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

The BHP Group Ltd (ASX: BHP) share price is marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed on Friday trading for $44.64. In morning trade on Monday, shares are swapping hands for $44.96 apiece, up 0.7%.

That compares to a 0.6% gain on the ASX 200 at this time.

And it's handily outpacing the 0.5% loss posted by Fortescue Metals Group Ltd (ASX: FMG) shares and the 0.7% loss of Rio Tinto Ltd (ASX: RIO) shares, both of which are slipping despite a 0.8% bump in the iron ore price to US$120.40 per tonne.

The BHP share price may be outperforming its rivals as investors eye the looming deadline for the ASX 200 miner's $75 billion takeover proposal of Anglo American (LSE: AAL).

Takeover deadline fast approaching

Unless you've just emerged from four weeks hiding under a rock, you're probably aware of BHP's acquisition goals of UK-listed Anglo American.

The BHP share price initially came under pressure when the first takeover bid was announced on 26 April.

With global copper demand surging and forecast to remain strong, sending the red metal to record highs last week, BHP is primarily interested in Anglo's portfolio of high-quality copper assets. Although the miner's Queensland-based coal mines are also on the agenda.

Complicating matters, BHP's takeover proposal involves divesting a number of Anglo American's assets, including its South African iron ore and platinum businesses and likely its diamond projects.

Labelling the deal as too complex and undervaluing its growth potential, Anglo's board rejected BHP's initial offer.

And the board swiftly rejected its second offer, lobbed on 14 May and valuing the miner around $64 billion, as well.

Enter the third bid, made on 23 May, which now values Anglo American at some $75 billion.

That bid earned BHP a one-week deadline extension under British legislation to negotiate with Anglo's board and make a binding offer. The new deadline is this Wednesday, 29 May.

"BHP looks forward to engaging with the board of Anglo American to explore this unique and compelling opportunity to bring together two highly complementary, world class businesses," Henry said on Thursday, when the BHP share price closed the day down 2.9%.

According to Liberum Capital research analyst Ben Davis (quoted by The Australian Financial Review), BHP could still increase its offer price.

However, Davis noted, "We are at a level where shareholders are increasingly vocal on capital discipline."

Davis added:

They have clearly got bored of bidding against themselves in a vacuum and have said they will not be increasing this offer any further … except in the situation of Anglo or an interloper coming up with a new acceptable number.

The BHP share price is up 4% over the past 12 months.

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.

More on Mergers & Acquisitions

a woman drawing image on wall of big fish about to eat a small fish
Mergers & Acquisitions

2 ASX shares with big takeover updates today

Investors are digesting just what the latest takeover updates could mean for these ASX shares.

Read more »

A senior pharmacist talks to a customer at the counter in a shop
Mergers & Acquisitions

Sigma share price: What's next with the Chemist Warehouse ASX listing?

What's next in this M&A saga?

Read more »

Teamwork, planning and meeting with doctors and laptop for medical, review and healthcare. Medicine, technology and internet with group of people for collaboration, diversity and support in hospital
Healthcare Shares

This ASX All Ords stock is rocketing 20% after accepting a takeover offer

These two diagnostics companies are planning to merge their operations.

Read more »

A man packs up a box of belongings at his desk as he prepares to leave the office.
Mergers & Acquisitions

What will happen to CSR shares next week?

It's a huge month for ASX veteran CSR this June...

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

Guess which ASX 200 mining stock is making a $276m UK acquisition

BHP failed in its UK takeover attempt but this mining stock is having more luck.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Mergers & Acquisitions

Guess which ASX 200 share just rocketed 15% on a $1.8 billion takeover offer

Investors are snapping up this ASX 200 share following confirmation of a takeover offer.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Guess which ASX All Ords stock is leaping 10% on a $1.3 billion bid

Deal accepted! This beaten-up stock is heading off the ASX.

Read more »

Two young male miners wearing red hardhats stand inside a mine and shake hands
Share Market News

Copper checkers: What's next for BHP shares after Anglo talks?

The miner's long term strategy hasn't changed.

Read more »