BHP is considering an acquisition of Anglo American, people familiar with the matter told Bloomberg. Negotiations are said to be in the early stages, and there is no certainty that BHP will decide to move forward with the deal.
Following the news, Anglo American confirmed that it had received an “unsolicited, non-binding, and highly conditional proposal” from BHP and that “there is no certainty that any offer will be made, or as to the terms on which any offer might be made.” BHP has not commented on the matter yet.
Anglo American is listed on the London Stock Exchange and has a market value of $34 billion, while BHP has a market cap of $149 billion and is traded in both England and Australia. Anglo American saw its profit plummet by 94% in 2023 after a $2.1 billion write-down linked to its diamond and nickel operations. The company’s net debt increased from $6.9 billion to $10.6 billion.
During the earnings release in February, CEO Duncan Wanblad said the company was in a “systematic review process of all assets to assess their role in the portfolio” and that “absolutely nothing is off the table.” One of the company’s most sought-after assets is its copper operation in South America.
In February, Anglo American sold a 15% stake in the Minas-Rio complex to Vale for $157.5 million. Additionally, it announced thousands of layoffs in South Africa. The company’s shares have fallen by 10% in the last 12 months.
Despite facing a delicate moment, Anglo American has experienced even more challenging situations in the recent past. In 2015, the company saw its shares plummet due to the decline in commodity prices and management failures.
BHP is the world’s third-largest producer of ore. In February, the company also reported an 86% drop in its net profit in the first fiscal half-year, which runs from June to December. The main reasons for the decrease were the decline in its nickel business and additional provisions related to the Mariana disaster.
A sellside analyst claims it is still early to determine the impact of the potential M&A in Brazil, but the deal could pose a threat to Vale – right in their own backyard. “They would become the world’s largest ore producers and gain a source of high-grade ore, which is Anglo’s Minas-Rio,” he said.
In the fourth quarter, Minas-Rio’s production increased by 15% year-on-year to 6.6 million tons. It was the operation’s best quarterly performance in history.
