In key news on Australian stocks, BHP Group Limited (AU:BHP) (NYSE:BHP) stock fell after its $38.8 billion acquisition bid for UK-based Anglo American PLC (GB:AAL) sparked backlash among shareholders and the South African government. Moreover, Anglo American rejected the deal today, stating that it significantly undervalued the company and was unappealing to its shareholders. Anglo further described the deal as “opportunistic” and added that it does not adequately assess its potential value.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Following the deal announcement yesterday, Anglo American shares soared 16% in trading. Meanwhile, BHP’s Australia-listed shares fell by 4.6% today.
BHP produces a range of commodities, including iron ore, coal, copper, nickel, and more. Meanwhile, Anglo American is engaged in the production of platinum, diamonds, copper, and iron ore.
BHP’s Bold Bid Faces Backlash
With the proposed takeover of Anglo American, BHP intended to expand its copper production, positioning itself as the leading producer of copper to capitalize on the surging demand for the metal. However, the deal announcement led to ripples in the market and faced backlash from the government and shareholders.
Gwede Mantashe, the South African minister of mineral resources, expressed opposition to the bid, citing his country’s unfavorable experience with BHP. However, he clarified that this stance does not represent the official government position.
Anglo’s shareholders also came forward to oppose the deal.
Nick Stansbury from Legal & General Investment Management (GB:LGEN), which holds the 11th-largest stake in Anglo, described BHP’s action as “highly opportunistic.” He added that the deal takes advantage of Anglo’s undervalued status and does not excite long-term investors.
Meanwhile, a fund manager at Abrdn (GB:ABDN), which is among the top 25 shareholders of Anglo, sees the possibility of the bid revision on a higher side.
Is BHP a Good Stock to Buy Now?
According to TipRanks’ consensus, BHP stock has been assigned a Moderate Buy rating, backed by 12 Hold and six Buy recommendations. The BHP share price target is AU$48.93, which is 13% above the current trading price.
