The Australian mining company BHP has set out plans for a £31bn takeover of rival Anglo-American in a deal that threatens to hasten the exodus of Britain’s largest firms from the City of London.
The proposed takeover of London-listed Anglo would rank as one of the biggest deals in the global mining industry in the last decade and comes as firms in the sector race to corner the market for copper, which is in high demand within the clean energy sector.
BHP, which has a market value of AUS$229bn (£119bn) told investors the deal would increase its “exposure to future-facing commodities through Anglo American’s world-class copper assets”, which includemines in Peru and Chile.
“This is all about copper,” said Ben Cleary, a portfolio manager at Tribeca Investment Partners, which holds shares in BHP and Anglo.
Copper is considered a key raw material in the race to cut carbon emissions because it is essential in manufacturing components for renewable energy projects and electric vehicles. Demand has climbed in recent years, and is expected to rise by 20% globally by 2035.
“I think it’s a good deal for BHP,” said Cleary of the proposed takeover. “Anglo is obviously very much in play now and there’s probably room for others to interlope. This is going to set the whole sector on fire.”
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, said the bid would also “send a fresh chill through the City”. Large FTSE-listed companies including the oil firm Shell have begun considering an exit in favour of a listing in the US.
Streeter added: “There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange. It comes hot on the heels of speculation that Shell might up sticks and leave for New York, rumours that Ocado may be considering leaving for the Big Apple, and follows the crushing disappointment of homegrown chip designer Arm choosing the Nasdaq over the FTSE 100.”
BHP dropped its dual UK-Australian listing after its shareholders voted overwhelmingly in favour two years ago. It was hoped that a sole listing on the Sydney stock exchange would simplify the process of making large acquisitions.
BHP’s bid values each Anglo share at £25.08 to give the owner of the world’s biggest diamond company, De Beers, a valuation of almost £31bn. The proposal sent Anglo’s share price soaring by 13% to £24.89 in early trading in London.
after newsletter promotion
Anglo American has seen its market value plummet in recent years, making the miner a “sitting duck” for a takeover bid from larger rivals, according to Dan Coatsworth, an investment analyst at AJ Bell.
He said: “The firm saw its market value shrink by 39% in 2023 due to operational setbacks, weaker commodity prices and downgraded production guidance. That provided an opportunity for a larger rival to pounce on the business, taking a long-term view that its assets have considerable value and any short-term operational issues can be fixed. BHP has been the one to step up to the plate.”
Under UK takeover rules, BHP has until 22 May to make a firm offer. Anglo American said its board was reviewing the proposal but there could be no certainty that a firm offer would be made, or on the terms that it might be made.