BHP (ASX: BHP) is free to relaunch a bid to acquire Anglo American Plc (LON: AAL) starting Friday, as the six-month standstill mandated by London’s takeover rules following the withdrawal of a previous offer has expired.
Last month, BHP chair Ken MacKenzie stated at the company’s AGM that BHP had “moved on” from its bid for Anglo. However, BHP later clarified that MacKenzie’s comments were not intended as an official statement under UK takeover rules.
The UK Takeover Panel agreed not to treat his remarks as a formal declaration of intent not to make an offer.
In April, BHP submitted an initial £31.1 billion ($39 billion) scrip proposal for Anglo, which was rejected. The company subsequently increased its bid twice before walking away on May 29, citing capital discipline and concerns about South African regulatory risk and costs.
Despite the earlier withdrawal, speculation persists that BHP may revisit its pursuit of Anglo, driven by its ambition to expand its copper portfolio. Analysts believe copper remains a compelling factor, especially as BHP projects a global copper deficit of 10 million metric tons within a decade.
BHP has committed at least $11 billion to copper-focused projects, including replacing a $5 billion concentrator at the Escondida mine in Chile, which is grappling with declining ore grades.
In September, BHP and Lundin Mining (TSX: LUN) launched a $3 billion joint bid for copper explorer Filo Corp (TSX: FIL), which owns the Filo del Sol project on the Chile-Argentina border. BHP will also acquire 50% of Lundin’s Josemaria project for $690 million.
“The commodity is so attractive that we’d like to have more opportunities for growth,” BHP CEO Mike Henry told the Financial Times this month.
This sentiment is echoed by analysts quoted in the newspaper.
Marina Calero, an analyst at RBC, noted: “An approach from BHP is very much still on the cards. The initial approach was all about copper, and that’s still the case — Anglo American has a very attractive copper portfolio.”
“The reasons to buy in April still apply. If anything, the case for copper demand has only strengthened,” said George Cheveley, a portfolio manager at Ninety One and a former BHP employee.
Meanwhile, Anglo American has taken strategic actions in response to BHP’s earlier interest. The company raised $530 million by selling a 6.6% stake in Anglo American Platinum Ltd as part of a wider restructuring program. On Monday, it secured a $3.8 billion deal for its remaining Australian coal mines.
Since BHP’s first offer in April, Anglo’s share price has risen 18%, while BHP’s has declined 11%, making an all-share deal potentially more expensive under the original proposal.
On Friday, a Jefferies analyst upgraded Anglo from Hold to Buy, raising its price target from £25.00 ($31.74) to £28.50 ($36.18).
Anglo’s shares rose 5% in London on Friday, increasing the miner’s market capitalization to £32.97 billion ($41.56 billion).
“The capital intensity of copper projects is rising,” said Jefferies’ Chris LaFemina, who attended a recent BHP-hosted tour of Escondida.
“I think ‘buy versus build’ still favours ‘buy.’”
