Anglo American (LSE: AAL) has become a takeover target for industry giant BHP Group in what could rank among the largest mining mergers in years, the British company disclosed Thursday.
Confirming it received an “unsolicited” buyout proposal from its Australian counterpart, Anglo said it is evaluating the approach with advisers ahead of a May 22 deadline. Details of the offer price were not provided.
News of BHP’s interest sent shares in the FTSE 100 miner surging over 10% in early trade as investors bet on a rich premium. Anglo American’s market capitalisation currently stands at around $36 billion compared to BHP’s $148 billion.
However, any deal would likely require Anglo to first separate its platinum group metals and iron ore divisions in South Africa – Anglo American Platinum and Kumba Iron Ore – which are listed independently in Johannesburg.
“There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made,” Anglo cautioned shareholders, advising them to take no action for now.
BHP declined to comment on the potential acquisition, which comes as the mining heavyweight grapples with sliding nickel prices and legal costs tied to a fatal 2015 mine disaster in Brazil.
For its part, Anglo only recently unveiled plans to cut thousands of jobs at its underperforming platinum mines in South Africa amid a protracted market downturn.
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