The BHP proposal is opportunistic and fails to value Anglo American’s prospects,
Anglo American has underperformed peers over recent times and this included a large sell-off in December, when CEO Duncan Wanblad announced production cuts to assist with cost reductions,
Having a bit more copper in the portfolio is a positive. If copper can move up from here this will likely offset any errors made in its purchase price of Anglo,
Anglo American is well positioned to create significant value from its portfolio of high quality assets that are well aligned with the energy transition and other major demand trends,
Anglo American has defined clear strategic priorities – of operational excellence, portfolio, and growth – to deliver full value potential and is entirely focused on that delivery,
BHP has form in paying more than their first approach, so I suspect Anglo’s shareholders will not be left disappointed,
There is a lot of water [still to go] under the bridge,
Anglo American shareholders may consider fair value closer to the share price in 2023 before operational issues emerged, and other suitors may be compelled to act at this price,
The copper assets in particular are attractive to BHP given its view on the importance of this commodity’s role in energy transition, but Anglo American’s South American iron ore and Queensland’s metallurgical coal operations are also highly complementary to BHP’s existing operations,
The [mining] industry is extremely concentrated today, and further consolidating it will not contribute to accelerating investment in the way we believe is needed,
There are concerns that if the deal goes through it could be the tip of the iceberg and more giants could leave the exchange.”
The combination would bring together the strengths of BHP and Anglo American in an optimal structure. Anglo American would bring its assets and long-term growth potential. BHP would bring its higher margin cash generative assets and growth projects along with its larger free cash flows and stronger balance sheet,
This is all about copper,
There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made,
We would be surprised if this is BHP’s final offer,
We would need to see the price BHP had in mind in order to form a better view,
If BHP does indeed continue to pursue this deal, we would be surprised if other bidders do not emerge,