BHP Group, the world’s largest mining company, made a dramatic last-minute attempt to acquire Anglo American Plc—potentially derailing Anglo’s $60 billion combination with Canada’s Teck Resources Ltd. Yet the audacious bid was abandoned, leaving the mining world stunned.
The surprise maneuver raises questions about BHP’s copper growth strategy, investor confidence, and appetite for high-stakes mergers in a market where copper demand is soaring. Governments worldwide see copper as a critical metal for electrification, renewable energy, and infrastructure, yet global supply constraints make such acquisitions highly coveted.
A High-Stakes Race for Copper Assets
For CEO Mike Henry and his executive team, the offer was a “now-or-never” effort to secure Anglo’s prized South American copper operations, assets the miner has long eyed. “Once Anglo and Teck complete their merger, acquiring the combined entity would become significantly more complex,” says a fund manager at Aberdeen Group Plc.
Anglo has spent the last period streamlining operations, including exiting South African platinum holdings that BHP did not want. When Anglo announced its combination with Teck, industry insiders realized that two top-tier copper assets were slipping away. Anglo and Teck shareholders were preparing to vote on the deal soon.
The Premium Offer
BHP’s team, led by Henry and Chief Development Officer Catherine Raw, crafted a bid consisting mostly of shares with a cash component. The offer included a premium above Anglo’s market price, making it more enticing than the zero-premium Teck deal. Analysts estimated that the bid valued Anglo shares comfortably above £30, compared with a closing price of £27.36.
Unlike BHP’s previous approach, which required Anglo to partially restructure first, this latest offer was simpler, more straightforward, and designed to appeal to Anglo from the outset.
Executives from both companies attended overlapping G-20 events in South Africa, coincidentally aligning with key government stakeholders—a crucial factor in BHP’s prior failed attempt. After discussions, BHP formally submitted the proposal to the Anglo board, aiming to keep negotiations discreet.
Rapid Reversal
The bold move triggered a swift reaction. Anglo informed Teck of BHP’s bid, prompting a reassessment of the proposed combination. Anglo’s board weighed the benefits of merging with Teck, including operational synergies in neighboring Chilean copper mines. Despite BHP’s efforts, media reports surfaced, and Anglo communicated that it was uninterested in abandoning its Teck agreement.
BHP, mindful of past public rejections and potential reputational damage, chose to withdraw immediately. “The offer would only work if Anglo was open from the start to a friendly deal,” a source said.
Copper Growth Beyond M&A
BHP’s focus on organic copper expansion remains strong, with projects in Australia and Argentina, as well as increased output at Escondida, the world’s largest copper mine. However, these projects require substantial investment and do not fully compensate for short-term production declines.
BHP issued a brief statement confirming it would not pursue Anglo, leaving UK takeover restrictions in place. The financial details of the offer remain undisclosed, leaving investors speculating on the potential valuation.
Lessons from a Failed Mega-Deal
The episode underscores the complexities of copper mergers and acquisitions amid volatile prices and geopolitical tensions. Copper prices have surged over 20% due to operational disruptions at key mines worldwide. While Anglo’s exposure to copper boosted its stock relative to BHP, investors remain cautious about valuation and overpayment risks.
“This highlights the challenges of executing large-scale M&A in copper today,” says a deputy head of investments and capital markets at Van Eck Associates Corp. “Timing, valuation, and geopolitical context all make these deals exceedingly difficult.”
BHP’s brief, high-profile bid serves as a cautionary tale in the competitive copper market, showing both the strategic desire to secure essential metals and the inherent risks in attempting mega-deals in an unpredictable global landscape.
