Australian multinational mining company BHP has confirmed that it made a buyout proposal to Anglo American. (Chris Ratcliffe/Bloomberg via Getty Images)
Australian multinational mining company BHP has confirmed that it made a buyout proposal to Anglo American.
BHP, which is eying Anglo’s copper assets, made the proposal on 16 April, according to a note to shareholders on Thursday morning. This follows a statement put out by Anglo on Wednesday that the Melbourne-headquartered company was interested in a buyout.
Anglo’s share price jumped 16% in response to the news of the potential buyout. Prior to this the stock had been down 10% over the past year. The company has been struggling as a result of persistent low platinum group metal prices.
BHP said the transaction would increase its exposure to future-facing commodities through Anglo American’s world class copper assets.
Anglo American has six copper operations in Chile and two in Peru. Early this week the company said in its production report that it saw an 11% increase in its copper output for the first three months of the year.
Anglo chief executive Duncan Wanblad said the company is pleased with copper performance in the first quarter. Quellaveco in Peru achieved its highest plant throughput rate, while Collahuasi and El Soldado in Chile benefited from higher grades.
“With copper now representing 30% of our total production, and having the benefit of several well-sequenced and value-accretive copper growth options within our portfolio over the medium-term, we are also setting up the business to deliver and grow into the major demand themes,” he said.
The transaction would be by way of a scheme of arrangement through which BHP would buy Anglo shares subject to the company demerging its holdings in its beleaguered subsidiaries Anglo American Platinum and Kumba Iron Ore.
BHP said diamond miner De Beers would be subject to a strategic review after the transaction was completed.
Also in response to Anglo’s initial statement, Kumba Iron Ore released a statement acknowledging the announcement of an unsolicited, non-binding proposal from BHP to its parent company.
In its statement, BHP said the potential transaction would allow Anglo American shareholders to realise an immediate and substantial premium over the current value of their shares.
The combined entity would retain BHP’s global listings on the Australian Securities Exchange, London Stock Exchange, JSE and New York Stock Exchange. Anglo shareholders would benefit from BHP’s monthly share trading liquidity of about $10 billion (R190 billion).
BHP said the combined entity would have a diversified portfolio of metals that would be expected to generate significant cash flows and have the financial capacity to support value-adding growth projects.
The Australian mining giant also said Anglo’s employees would continue working in the combined entity.