In key news on UK stocks, Anglo American PLC (GB:AAL) announced its plans to spin off its diamond business unit De Beers amid rising takeover pressures from Australian rival firm BHP Group Limited (AU:BHP). This move is part of the company’s restructuring to simplify its portfolio and generate higher value for its shareholders.
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Anglo’s shares fell 3.23% in yesterday’s trading session, while BHP’s ASX-listed stock was up by 2.6% today as of writing.
Anglo American’s Diamond Divestment: End of an Era
Angle American announced various structural changes, which will be implemented once it completes its asset review, which began in 2023. Anglo’s CEO Duncan Wanblad described these moves as “radical changes,” which will help the company to focus on its key assets like copper, premium iron ore, and crop nutrients.
As part of its portfolio restructuring, Anglo aims to either sell or demerge De Beers to enhance the flexibility of both units. According to Reuters, Anglo may be considering options to list De Beers, potentially on the London market. Reports suggest that the plan is still in its early stages. Anglo American holds an 85% stake in De Beers, with the government of Botswana owning the remaining share.
Additionally, Anglo intends to divest its steelmaking coal, nickel, and platinum operations.
Deal or No Deal?
News of the spin-off surfaced after Anglo rejected BHP’s second and improved takeover offer of £34 billion yesterday. Anglo stated that the revised offer still undervalues the company and is not attractive to its shareholders. According to UK takeover rules, BHP could submit a formal and definitive offer until May 22 or opt to withdraw from the acquisition process.
During the takeover bids, shareholders have increasingly urged the company to articulate a precise vision for the miner’s future. There are concerns that its underperforming segments are overshadowing the profitability of its copper business.
Overall, analysts have praised Anglo’s recent announcement as a strategic move to generate interest from other potential buyers for the company’s non-core divisions.
Is Anglo American a Good Stock to Buy?
According to TipRanks’ consensus, AAL stock has been assigned a Moderate Buy rating, backed by eight Buy and four Hold recommendations. The Anglo American share price target is 2,733.22p, which is 4.5% above the current trading price.
