AFP, April 25 (Editor Zhou Ziyi) BHP Group Ltd. (BHP Group Ltd.), the world's largest mining company, has made a takeover offer to rival Anglo American Plc (Anglo American Plc). The move could trigger the biggest restructuring of the industry in more than a decade.

Anglo-American Resources Group said on Wednesday evening that the company had received an unsolicited proposal for an all-stock consolidation from BHP Billiton. The company added that BHP Billiton's condition is that Anglo-American Resources will first split its platinum and iron ore business in South Africa.

BHP Billiton valued Anglo-American Resources Group at £31.1 billion (US$38.8 billion), a 15% premium over its market capitalization of £27 billion (US$33.7 billion).

If successful, this deal will mark the completion of BHP Billiton's first large-scale acquisition in many years. Over the past few years, under the leadership of CEO Mike Henry, BHP Billiton has rekindled interest in transformational acquisitions.

Copper business with attractive resources in the UK and the US

Anglo-American Resources Group has a large copper business in South America, and also has a deep business in South Africa, including platinum, iron ore, and diamonds. It owns 85% of the world-famous “Diamond King” De Beers. In recent years, copper is an important metal for energy transition and electrification. Demand for copper ore has been rising steadily, and prices have risen accordingly when supply is tight.

Despite this, Anglo-American Resources Group's stock price performance over the past year still lagged behind its competitors, mainly due to a major dive in its diamond business.

Due to shrinking market capitalization, Anglo-American Resources has been viewed as a potential acquisition target by large mining companies, especially at a time when most companies in the industry are anxious to increase copper reserves and production.

However, although Anglo-American Resources has an “attractive” copper business, its complex internal structure and commodity mix, particularly its business other than copper mining in South Africa, has deterred some buyers.

Can the biggest copper miner be born?

As can be seen from the “premise of divesting the platinum and iron ore business in South Africa” mentioned in BHP Billiton's merger proposal, BHP Billiton's plan to acquire British and American resources was because it matched the latter's copper resources.

Analysts believe that if BHP Billiton and Anglo-American Resources Group finally successfully form an alliance, the two will create the world's largest copper miner as a wave of demand in the new energy sector hits.

BHP Billiton's copper production in 2023 is about 1.2 million tons, while Anglo-American Resources Group's production is 826,000 tons. If the two merge, the merged group will account for about 10% of the global mine supply.

Christopher LaFemina, an analyst at Wall Street investment bank Jefferies, believes that if BHP Billiton actually intends to continue to seek this deal, then we think there will be other bidders.

Jefferies values Anglo-American Resources Group at 42.6 billion US dollars, which is 28% higher than its current market value. The bank believes that only when the purchase price reaches this price can the deal “cross the finish line.”

Currently, BHP Billiton is listed in both London and Sydney, with a market capitalization of about 149 billion US dollars.

Additionally, Jefferies pointed out that antitrust “may be an issue” because governments see copper as a strategic mineral.

Anglo-American Resources Group said in its latest statement that its board of directors is reviewing the proposal.

According to a recent media report on Thursday (April 25), people familiar with the matter revealed that Anglo-American Resources is considering selling the diamond business unit De Beers. This is the latest development that has occurred since BHP Billiton's acquisition proposal was issued.