Renewable Energy Revolution Sparks Mega Mining Acquisition
Global mining powerhouse BHP is on the brink of a monumental $40 billion acquisition bid to acquire Anglo American, its British counterpart, marking a historic milestone in the mining industry.
Mining company BHP has offered nearly $40 billion to acquire UK rival Anglo American, making it the biggest mining deal ever. BHP announced on Thursday that it valued Anglo American shares at £25.08 ($31.40) each, totaling £31.1 billion ($38.9 billion). The acquisition, if successful, will give BHP more access to copper reserves.
According to Dealogic data, the potential deal could be worth more than the $38.3 billion acquisition of Switzerland’s Xstrata by Glencore in 2012. This would make it the largest merger or acquisition in the mining industry by value since Dealogic started collecting data in 2004.
Anglo American stated that its board is currently reviewing the proposal. The company mentioned in a statement that there is no guarantee that BHP will make a formal offer, or what the terms of that offer might be.
BHP has a deadline of May 22 to submit a formal offer.
Following the announcement, shares in Anglo American experienced a significant increase, rising by as much as 13.8%. As of 5.47 a.m. ET, they were being traded at £24.55 ($30.72). Conversely, shares in BHP ended the day 0.6% lower in Australia.
Copper is a crucial component in various renewable energy technologies like solar panels and electric vehicles. The demand for copper is high, with its price on the London Metals Exchange increasing by more than 13% this year to nearly $10,000 per metric ton, the highest level in about two years.
In an effort to expand its access to copper and nickel, BHP acquired Australian competitor Oz Minerals a year ago. This acquisition was part of BHP's strategy to meet the growing demand for essential minerals required for electric vehicles, wind turbines, and solar panels, as stated by company CEO Mike Henry.
The approach taken by BHP may raise worries about major companies in the United Kingdom potentially exiting the London Stock Exchange.
According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, the buyout offer could have a significant impact on the City of London. Streeter expressed concerns that if the deal is finalized, it may set a precedent for other large companies to follow suit and leave the exchange.
Rob North contributed reporting. This is a developing story and will be updated.
Editor's P/S:
The potential acquisition of Anglo American by BHP is a significant event in the mining industry, and it has the potential to reshape the global copper market. BHP's offer values Anglo American at £31.1 billion ($38.9 billion), which would make it the largest mining deal ever. The acquisition would give BHP control of Anglo American's vast copper reserves, which are essential for the production of renewable energy technologies such as solar panels and electric vehicles.
The deal is still subject to approval by Anglo American's board, but it is expected to be completed by May 22. If the deal goes through, it will be a major blow to the London Stock Exchange, as Anglo American is one of the largest companies listed on the exchange. It could also set a precedent for other large companies to leave the London Stock Exchange, which would be a significant loss for the UK economy.
