BHP Group is preparing to renew its bid for Anglo American, this time with a potential partner to help shoulder the burden of the deal. CEO Mike Henry’s previous solo attempt to acquire Anglo earlier this year collapsed amid concerns over the proposal’s complexity and BHP’s reluctance to offer a substantial premium. With the mandatory six-month cooling-off period under UK takeover rules now expired, Henry faces fresh challenges but also new opportunities.
The previous failed bid underscored the hurdles BHP encountered in persuading Anglo’s board and navigating regulatory pushback, particularly from South African authorities. Now, the prospect of a “club deal,” involving collaboration with another major industry player, could smooth out several of these obstacles. Partners like Glencore or Vale Base Metals, both of which have strategic incentives to align with BHP, may play a key role in the revived pursuit.
Copper remains a critical resource for BHP as the mining giant wrestles with challenges at its existing assets. The company’s flagship copper operations in Chile are seeing diminishing production levels and declining ore grades. Maintaining output will require significant capital expenditure, estimated at up to $10 billion by 2030.
Henry’s original interest in Anglo American was fueled by the opportunity to tap into the smaller miner’s high-margin copper assets. Anglo’s copper operations are well-positioned to bolster BHP’s supply and profitability in the long run.
However, after the failed bid, BHP’s share price has taken a hit, dropping more than 10% since Henry abandoned the deal. This price movement further eroded the implied value of the original all-stock proposal, making any new offer likely to carry a steeper premium to entice Anglo’s leadership back to the table.
Further complicating matters is Anglo CEO Duncan Wanblad’s recent decision to sell the company’s Australian coal mines to Peabody Energy. The move eliminates one of the key synergy opportunities that BHP previously touted — combining Anglo’s coal assets with BHP’s existing operations in Australia for potential cost savings. This divestment places greater emphasis on Anglo’s copper and iron ore divisions as the deal’s primary attractions.
Club Deal
Partnering with a rival through a so-called “club deal” may offer Henry a pathway to overcome the limitations that derailed the first bid. While such partnerships are not without challenges — particularly around aligning on valuation and strategy — they can address specific roadblocks that a solo bidder might face.
A key issue in May was opposition from South African regulators. Anglo American’s significant presence in South Africa, especially through its Kumba iron ore business, raised concerns about a foreign takeover of critical national assets. A partner like Glencore, which already has deep operations in South Africa, could acquire Kumba as part of the broader transaction. This would not only ease regulatory resistance but also enable BHP to focus on Anglo’s copper assets — the crown jewel of the acquisition.
Another possible collaborator is Vale Base Metals, chaired by Mark Cutifani, Anglo American’s former CEO. Vale brings strong financial resources and a strategic interest in diversifying its portfolio beyond its current focus on copper and nickel. Aligning with Vale would allow BHP to share both the financial load and the operational integration of Anglo’s assets.
The shifting dynamics of the copper market could also work to BHP’s advantage this time around. The price of copper has fallen approximately 20% since BHP’s initial bid collapsed, potentially reducing the overall cost of acquiring Anglo’s copper operations.
However, Anglo’s board is unlikely to settle for a cut-rate valuation. While the lower commodity price might justify a slightly less aggressive premium, the fundamental value of Anglo’s assets remains strong, particularly as global demand for copper grows with the energy transition. As electric vehicles, renewable energy infrastructure, and grid modernization expand, the red metal’s strategic importance continues to rise.
As Henry weighs his next steps, all eyes will be on BHP’s ability to structure a proposal that satisfies Anglo’s board, shareholders, and regulatory authorities. Whether through a club deal or another creative approach, the stakes remain high for what could be one of the mining sector’s most transformative deals in recent years.
Information for this story was found via Reuters and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
