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(Alliance News) - BHP Group Ltd on Thursday confirmed it has offered to buy mining peer Anglo American PLC in an all-share deal valuing the London-based miner at GBP31.1 billion.
This latest development comes after Anglo American earlier on Thursday said it was reviewing a takeover bid from BHP, which now has until May 22 to make a firm offer for Anglo American.
Shares in Anglo American were up 12% to 2,463.00 pence each in London early Thursday, giving the company a market capitalisation of GBP32.64 billion. They also were up 16% to ZAR595.00 in Johannesburg.
BHP was down 3.4% at 2,283.00p in London for a market cap of GBP115.31 billion. They were down 3.5% to ZAR545.52 in Johannesburg. They had closed down 0.6% at AUD45.23 in Sydney on Thursday.
Melbourne-based BHP said its unsolicited, non-binding and conditional offer will see Anglo American shareholders receive 0.7097 of a BHP share for every share share they hold in Anglo American. BHP tabled the offer to the Anglo American board on Tuesday last week, it said.
As part of the proposed deal, BHP wants Anglo American to split off Anglo American Platinum Ltd and Kumba Iron Ore Ltd in South Africa.
Based on closing market prices on Tuesday this week, being the last trading day prior to press reports of the deal, the offer represents a total value of about GBP25.08 per Anglo American share, including GBP4.86 in Anglo American Platinum shares and GP3.40 in Kumba shares, valuing Anglo American at GBP31.1 billion, BHP said. The premium on the implied market value of Anglo American's unlisted assets is around 31%.
The proposal merger is subject to due diligence by BHP on Anglo American, which has been offered reciprocal due diligence on BHP.
"In addition to allowing Anglo American shareholders to realise an immediate and substantial premium over the current value of their Anglo American shares, the combination would deliver further ongoing value for Anglo American shareholders," BHP said.
The combination would bring together the strengths of BHP and Anglo American in an optimal structure, BHP said.
The combined entity would focus on iron ore and metallurgical coal and future facing commodities, including potash and copper.
By Artwell Dlamini, Alliance News reporter
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