In key news on Australian stocks, BHP Group Limited (AU:BHP) has abandoned its $49 billion takeover plan for UK-based mining rival Anglo American PLC (GB:AAL). The decision came after Anglo American rejected a final request for additional time, ending BHP’s six-week pursuit for now. The merger would have combined two of the industry’s largest companies, creating a major player in the copper market.
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BHP shares are trading down by 1.5% as of writing, while Anglo’s shares were down by 4% in yesterday’s trading session.
BHP is a multinational mining corporation that produces a wide range of commodities, including iron ore, coal, copper, nickel, and various other minerals. Meanwhile, Anglo American is a leading producer of platinum and also produces diamonds, copper, and iron ore.
BHP and Anglo’s Deal Fallout
BHP first proposed a takeover offer for Anglo in April, in a move to enhance its copper base. The offer was rejected by Anglo, stating it was undervalued. Later, on May 20, BHP made its final and improved offer but was again disappointed. BHP made three increases in its all-share bid, but the two companies consistently clashed over the structure of the deal.
BHP believed its proposal for Anglo American presented a compelling opportunity to increase value for shareholders on both sides. However, the two companies were unable to reach an agreement regarding regulatory risks and costs.
Another significant factor contributing to the collapse of the deal was its requirement for Anglo to separate its South African businesses. BHP was targeting Anglo’s copper base, anticipating its growth amid the energy transition. However, it had no interest in acquiring Anglo’s South Africa-based assets, including Anglo American’s Platinum and Kumba Iron Ore operations. Nonetheless, BHP stated that it was confident that through collaboration with Anglo American, they could have secured all necessary regulatory approvals, including those in South Africa.
Meanwhile, Anglo is focused on restructuring its portfolio to maximize value for its shareholders. It recently unveiled plans to separate its De Beers diamond unit and is also considering divesting its steelmaking coal, nickel, and platinum operations.
Is BHP a Good Stock to Buy Now?
According to TipRanks’ consensus, BHP stock has been assigned a Moderate Buy rating, backed by 10 Hold and six Buy recommendations. The BHP share price target is AU$47.54, which is 7% above the current trading price.
