Mining giant BHP Group (BHP) has made a $38.90 billion U.S. bid for rival Anglo American (AAL).
Australia-based BHP has made an all-stock offer that would give Anglo American’s ordinary shareholders 0.7097 BHP share for each share of Anglo American that is held.
In a news release, BHP said the acquisition will optimize Anglo American’s “assets and long-term growth potential.”
The combined companies would create the world’s largest copper miner, representing 10% of global output. Anglo American has a huge copper mine in South America.
Mining companies are actively trying to shore up copper supplies ahead of projected shortages and the metal’s key role in the energy transition, say analysts.
The deal would also increase BHP’s diamond sector exposure, given Anglo American’s 85% stake in jewelry retailer De Beers.
The mining industry has experienced an increase in mergers and acquisitions in recent years as companies position themselves for shifting global demand.
It is not immediately clear when the acquisition will be completed.
The stock of BHP is down 3% on news of its bid for Anglo American. Over the last 12 months, BHP’s share price has risen 4% to trade at $59.24 U.S.
Anglo American’s stock is up 12% on news of the deal. In the past year, its stock has gained 2% to trade at $3,084.70 U.S. per share.