London-listed miner Anglo American has said it is considering a “highly conditional” all-stock offer from the world’s largest miner, BHP.
In a statement to the London Stock Exchange today, Anglo’s board said it was reviewing a £31.1bn all-share offer for a buy-out by by the world’s largest mining company, preceded by de-mergers by Anglo of its entire shareholdings in its Anglo American Platinum (Amplats) and Kumba Iron Ore businesses, both listed in South Africa.
Investors in Anglo American would receive 0.7097 BHP shares for each share they hold, as well as shares in Anglo American Platinum Ltd. and Kumba Iron Ore Ltd.
A BHP statement said: “The combination would bring together the strengths of BHP and Anglo American in an optimal structure. Anglo American would bring its assets and long-term growth potential. BHP would bring its higher margin cash generative assets and growth projects along with its larger free cash flows and stronger balance sheet.”
The company added that the two parts of the proposal would be inter-conditional and that “there can be no certainty that any offer will be made nor as to the terms on which any such offer might be made.”
The combined entity would retain BHP’s global listings on the Australian, London, South African and New York exchanges and Anglo American shareholders would be able to benefit from the BHP’s monthly share trading liquidity of approximately $10bn (£7.9bn).
The deadline will only be extended with the consent of the Takeover Panel.
Rumours of a takeover bid for Anglo American have been swirling for some time, as the company has suffered at the hands of subdued prices across several major business units, including platinum metals and diamonds.
Earlier this week, the company reported that its De Beers diamond division was left battered and bruised at the hands of a near-total bottom-out in consumer demand for diamonds at the end of last year, causing a massive inventory over-supply.
Anglo does however have a major stake in global copper and owns some of the highest-yielding sites in South America.
The proposed deal could be the largest and most influential for the mining sector since London-listed Glencore’s acquisition of Xstrata in 2013.
Anglo is reportedly being advised by Centerview, Goldman Sachs and Morgan Stanley, while USB and Barclays are advising BHP on the proposal.
Anglo American and BHP were contacted for comment.