According to the terms of the proposed deal, shareholders of Anglo American will receive 0.7097 shares of BHP for each ordinary share in Anglo American and ordinary shares in Anglo American Platinum and Kumba Iron Ore
BHP proposes to acquire rival mining major Anglo American in an all-stock deal. (Credit: Anglo American)
UK-based mining company Anglo American has confirmed the receipt of a buyout offer valued at £31.1bn from rival Australian mining and metals company BHP Group.
According to the terms of the proposed deal, shareholders of Anglo American will receive 0.7097 shares of BHP for each ordinary share in Anglo American and ordinary shares in Anglo American Platinum and Kumba Iron Ore.
The proposal is conditional upon the pro-rata distribution by Anglo American of its entire interests in Anglo American Platinum and Kumba Iron Ore to its shareholders before the completion.
BHP’s consideration for Anglo American represents a total value of about £25.08 per Anglo American ordinary share. This includes £4.86 in Anglo American Platinum shares and £3.40 in Kumba Iron Ore shares.
Through the merger, BHP aims to create an entity with a portfolio of large, low-cost, long-life Tier 1 assets centred on iron ore and metallurgical coal, alongside forward-looking commodities such as potash and copper.
These assets are anticipated to yield substantial cash flows, enabling the combined entity to finance value-enhancing growth initiatives at the optimal time, said BHP.
Besides, the deal is expected to boost BHP’s exposure to future facing commodities through Anglo American’s copper assets.
According to BHP, the transaction will complement its iron ore and metallurgical coal portfolios with Anglo American’s iron ore operations in Brazil and metallurgical coal assets in Queensland, Australia.
The acquisition will also deliver synergies as well as value adding copper growth options and increased geographic diversification of the operating footprint, said BHP.
The proposal is non-binding and contingent upon customary conditions, including the completion of satisfactory due diligence by BHP. Anglo American has been granted reciprocal due diligence rights from BHP.
Both parties said there are no guarantees that any formal offer will be made in this regard.
Anglo American stated that the proposal is “unsolicited, non-binding and highly conditional”. The company’s board is presently studying the proposal with its advisers.
Last year, BHP acquired its rival Australian mining company OZ Minerals through a scheme implementation deed (SID) in a deal worth A$9.6bn.