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BHP-Anglo American deal now more likely - Jefferies

Published 2024/05/23, 11:06
© Reuters.

Investing.com - Anglo American (JO:AGLJ) rejected a third bid from rival BHP Group (NYSE:BHP), but Anglo agreeing to a one-week extension for a binding takeover offer, is encouraging, according to Jefferies, suggesting a deal is now more likely.

BHP, the world's biggest listed mining group, now has until May 29, after the one-week extension, to make a firm bid for Anglo American or it will be forced to walk away for at least six months under the UK's takeover rules.

BHP's approach is still conditional on Anglo unbundling its platinum and iron ore assets in South Africa, and it’s the fate of these businesses which remain a major stumbling block given Anglo’s deep roots in that part of the world.

“Our base case now is that discussions between BHP and Anglo will lead to a recommended deal,” said analysts at Jefferies, in a note dated May 22.

“We think it is possible that BHP either raises its offer again (albeit modestly) or agrees to changes in structure, or does both to satisfy the Anglo Board.”

The bank noted that BHP probably cannot own both Kumba and Minas Rio due to antitrust issues in iron ore, and BHP is unlikely to agree to own Amplats due to safety issues in PGM mining. 

“A separation of Kumba and Amplats will be necessary, in our view. The question is whether this will be done by Anglo as part of this transaction or by BHP sometime soon thereafter,” Jefferies added.

At 05:00 ET (09:00 GMT), Anglo stock traded 0.1% lower at £26.95, while BHP stock fell 0.7% to £23.13.


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