Anglo American Takeover Price Needs to Surpass £30/Share, Survey Shows

(Bloomberg) — A takeover of Anglo American Plc would need to be pitched at more than £30 ($37.6) per share, a higher price than BHP Group Ltd. offered last week, according to analysts and traders surveyed by Bloomberg.

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Anglo American shares are trading 8.8% above the value of BHP’s rebuffed takeover proposal, a sign traders are also expecting a higher bid. The premium has increased since Bloomberg News reported over the weekend that BHP is considering making an improved proposal.

Of the 12 survey participants who gave an acceptable price for a possible deal, the average value was £30.43 per share, with a range in responses between £28 and £35. BHP’s initial proposal, which has several moving parts, was at about £24.44 pence a share, according to a rough calculation by Bloomberg News based on where all the stocks are trading near midday in London.

Analysts at Deutsche Bank led by Liam Fitzpatrick see two possible scenarios: either the company is acquired at an improved price, or Anglo American delivers on some of the divestments proposed by BHP, which include a spin-off of platinum and iron ore subsidiaries.

A bid price above £31 would reflect fuller value, particularly if a cash component is introduced to compensate for uncertainties related to the spin-offs, Fitzpatrick wrote in a research note published Monday.

There is no certainty that any offer will ultimately be made. BHP has until May 22 to announce a firm intention to make an offer.

(Adds comparison to current BHP proposal in second and third paragraph)

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Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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