Scott Murdock and Melanie Burton
(Reuters) – BHP Group shares fell 4% on Friday on the first day of trading in its Australian-listed shares after announcing a $38.8 billion bid for smaller rival Anglo American (JO:) in a deal that would create largest mining company in the world.
BHP said it would offer 25.08 pounds ($31.39) per Anglo share, 31% above the shares’ previous closing price before the offer was made public on Thursday.
Anglo shares rose 16.1% to £25.60 in London trading on Thursday.
BHP shares fell 4.5% in early trading on Friday. The shares did not trade on Thursday as the Australian share market was closed for the holidays, meaning Friday’s trading is investors’ first reaction to the mega-takeover plan.
“With concerns about economic growth in China and softening commodity forecasts, the market is thinking this is a top-of-the-cycle deal and BHP is overpaying,” said John Milroy, a private wealth adviser at brokerage Ord Minnett, having due to falling stock prices.
The benchmark S&P/ASX200 index was down 1.3% in early trade.
BHP has until May 22 to make a binding bid. As Reuters reports, citing sources, there is early opposition from Anglo management, which does not consider this proposal attractive enough.
If successful, the deal would be the largest mining takeover in the world in 2024 and would rank among the industry’s top 10 largest ever, according to LSEG.
Under its plan, BHP plans to move Anglo’s iron ore and platinum assets to South Africa, where BHP, the world’s largest listed miner, does not operate.
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