Investing.com – Australian shares of BHP Group Ltd (ASX:) fell sharply on Friday after the mining giant made a $39 billion bid for its smaller peer. Anglo-American PLC (LON:), a deal that could potentially create the world’s largest mining company.
BHP shares fell 4.4% to A$43,230. They also lowered the index by more than 1%.
In its announcement, the miner said it was offering 0.7097 shares for each Anglo share and was also offering to sell Anglo’s two key platinum and iron ore mining interests in South Africa. Anglo American Platinum Ltd. (JO:) and Kumba Ltd (JO:).
The total transaction value is approximately £25.08 per share, valuing Anglo at approximately £31.1 billion ($38.8 billion). Anglo shares jumped 16% on Thursday following news of the deal and ended the day above BHP’s offer price of around £25.60.
Reuters reported that Anglo directors did not find the offer attractive, and some analysts and investors also considered it largely opportunistic.
The offer comes just months after Anglo launched a strategic review of its assets following a 94% fall in annual profits and several asset write-downs amid weakening global demand for commodities. China was the main source of this weakness.
But after Thursday’s rally, Anglo American’s London shares are up more than 30% in 2024.
BHP’s offer comes as the world’s most valuable miner looks to expand its copper mining operations amid expectations that a global push for electrification and green energy will boost demand for the red metal. Copper is a key component of power transmission infrastructure and also plays a vital role in the production of electric vehicles.
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BHP’s takeover of Anglo could give the miner control of at least a tenth of global copper production.
It hit a two-year high earlier in April on expectations of supply cuts after major Chinese refineries signaled production cuts and Russian metals exports were hit with stricter Western sanctions.
But prices have fallen in recent sessions after Chile’s top copper producer said it intends to increase output from state copper miner Codelco.