BHP Group (BHP) Drops Acquisition Plan for Anglo American

BHP Group BHP has made a statement that it has officially dropped its bid to acquire Anglo American NGLOY. This ends BHP’s six-week pursuit for the takeover of Anglo American, which would have created a global mining giant focused on copper and other minerals that are expected to drive the transition to renewable energy.BHP’s statement comes after Anglo American’s announcement on May 22 that its board had unanimously rejected BHP’s third unsolicited, non-binding and highly conditional takeover proposal. This offer referred to BHP’s increased and final bid of $49 billion made on May 20.BHP’s earlier proposals for a potential combination with Anglo American were submitted to the company’s board on May 7 (valued at $42.67 billion) and Apr 16 (deal value of $39 billion).BHP’s all-share offer for Anglo American required that the company would have to complete two separate demergers of its entire shareholdings in Anglo American Platinum Limited and Kumba Iron Ore Limited to its shareholders, before the takeover. The all-share offer and required demergers would be inter-conditional.Anglo American stated that the offer did not meet the board’s expectations of value delivered to its shareholders. Also, the requirement to pursue two demergers of publicly listed companies is unprecedented. Further, this combination would require additional material approvals. The approvals required would likely result in material conditions being imposed that would disproportionately impact the value of Anglo American Platinum and Kumba and, subsequently, the value delivered to Anglo American’s shareholders.NGLOY had, however, provided an extension of seven days till May 29, to BHP to come up with a binding offer and propose solutions to address the risks and concerns over the value impact on its shareholders. BHP has decided not to pursue the bid anymore.BHP is now subject to restrictions per Rule 2.8 of the Takeover Code, and will not be able to make any further offer within the next six months. It can make an offer if a new party bids for Anglo American.BHP’s plans for the takeover of Anglo American reflected its ongoing strategy to strengthen its portfolio, which will enable it to focus on commodities like copper, nickel and potash to ride on growing global trends such as decarbonization, electrification population growth, rising living standards in the developing countries among others. In sync with this, BHP Group has joined forces with mining companies focused on early-stage copper and nickel projects, and made additional investments in fiscal 2023 in Brixton Metals, Midland Exploration, Filo Mining and Kabanga Nickel. Following the completion of the acquisition of OZL in May 2023, BHP established the Copper South Australia province. The addition of the Prominent Hill and Carrapateena operations, combined with the Olympic Dam and the potential Oak Dam development, is expected to unlock a pathway to increase volumes and value from the province.

Price Performance

BHP’s shares have gained 4.1% in a year compared with the industry’s 17.2% growth.

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Zacks Rank & Stocks to Consider

BHP currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS and Ecolab Inc. ECL. CRS currently sports a Zacks Rank #1 (Strong Buy) and ECL carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.18 per share. The consensus estimate for 2024 earnings has moved 6% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.1%. CRS shares have gained 134.9% in a year.The consensus estimate for Ecolab’s 2024 earnings is pegged at $6.59 per share, indicating an increase of 26.5% from the prior year’s reported number. It has an average trailing four-quarter earnings surprise of 1.3%. ECL shares have gained 34.5% in a year.

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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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