BHP shares drop after $60b bid for Anglo American
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The news: Shares in resources giant BHP have tumbled on the ASX after it confirmed a takeover bid for rival Anglo American on 16 April, in a move to boost its exposure to future-facing commodities like potash and copper.
The numbers: BHP shares were down 4% to $43.41 after the first hour of trading on the ASX.
Under the proposed all-scrip deal, Anglo American shareholders will get 0.7097 BHP shares for each share held plus shares in Anglo Platinum and Kumba iron ore businesses, valuing the target company at £31.1 billion ($59.7 billion).
The deal value represents a premium of 78% to the 90-day volume weighted average closing price of Anglo American’s shares, BHP said.
The context: The bid is conditional on the spin-off of Anglo American’s platinum business and the Kumba iron ore assets in South Africa to Anglo’s existing shareholders.
BHP, the world’s biggest mining company, said the combined entity would hold a portfolio of large, low-cost, long-life Tier 1 assets focused on iron ore, metallurgical coal and future-facing commodities, including potash and copper, with significant cash flows. It would also deliver meaningful synergies and eliminate duplication.
BHP noted that Anglo American’s other operations including its diamond business would be subject to a strategic review post completion.
Anglo American said on Thursday its board was currently reviewing the proposal.
The source: ASX announcement
