In key news on Australian stocks, BHP Group Limited (NYSE:BHP) (AU:BHP) has proposed an all-share deal to take over the UK-based rival mining giant Anglo American PLC (GB:AAL). The merger would combine two of the mining sector’s biggest firms and could potentially change the landscape of the sector.
Anglo American has acknowledged that it received BHP’s unsolicited proposal and is currently evaluating the details. However, the company stated that the likelihood of an offer remains uncertain. Anglo further disclosed that the offer is contingent on its spin-off of two units – Anglo American Platinum and Kumba Iron Ore. According to UK takeover regulations, BHP has until May 22 to present a definitive offer.
Year-to-date, BHP shares have lost 10.5%, whereas, AAL stock has gained almost 11% in trading.
BHP is a multinational mining company, producing diverse commodities like iron ore, coal, copper, nickel, and a variety of other minerals. Meanwhile, Anglo American is a prominent producer of platinum, with a product lineup that includes diamonds, copper, and iron ore.
BHP’s Copper Expansion
Upon completion, BHP’s acquisition of Anglo American is expected to enhance the company’s copper base, which is a crucial commodity for it. Copper plays a vital role in renewable energy projects and the production of electric vehicles. Globally, there’s been a spike in demand for copper due to the transition from fossil fuels to cleaner energy sources.
As a result, major mining companies are racing to secure fresh copper supplies. If the deal goes through, it would mark the second significant acquisition for BHP in approximately a year. BHP acquired Australia-based Oz Minerals in 2023, in a move to further expand its presence in copper and nickel.
Anglo American operates copper mines in Chile and Peru, where BHP also has a presence. Together, their combined output would contribute approximately 2.6 million metric tons annually, accounting for roughly 10% of global production.
Is BHP a Good Stock to Buy Now?
According to TipRanks’ consensus, BHP stock has been assigned a Moderate Buy rating, backed by 12 Hold and six Buy recommendations. The BHP share price target is AU$48.54, which is 7% above the current trading price.
