{"id":10051,"date":"2024-05-23T06:39:35","date_gmt":"2024-05-23T06:39:35","guid":{"rendered":"https:\/\/economicherald.net\/?p=10051"},"modified":"2024-05-23T06:39:35","modified_gmt":"2024-05-23T06:39:35","slug":"monsters-of-rock-is-there-too-much-risk-in-bhp-anglo-deal","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=10051","title":{"rendered":"Monsters of Rock: Is there too much risk in BHP-Anglo deal?"},"content":{"rendered":"

BHP puts its foot in the door at Anglo, securing a one-week extension to improve the terms of its offer
\nAnglo American\u2019s board knocked back a bid priced at upwards of \u00a331\/share
\nBHP and commodity crunch send mining indexes spiralling<\/p>\n

\u00a0<\/p>\n

BHP (ASX:BHP)<\/strong><\/a> has its foot well and truly in the door of the Anglo American boardroom, securing a one-week extension after the London listed mining giant waved off its third and final offer.<\/p>\n

The $73 billion punt came in at \u00a331.11\/share, well above its initial greeting at \u00a325.08 and follow up of \u00a327.53.<\/p>\n

That still includes the distribution of Kumba Iron Ore and AmPlats to Anglo\u2019s existing shareholders but ups their holding of the merged entity from 16.6% to around 17.8%.<\/p>\n

That\u2019s likely not enough to get existing BHP holders, some of whom own both companies, to get really mad and clearly enough to get Anglo talking.<\/p>\n

BHP shares of course immediately plunged ~3%, cutting out some of the deal value, though it could rebound over time. It\u2019s always been thought an offer over \u00a330\/sh would get it into the ears of Anglo\u2019s board and major shareholders, a day after South Africa\u2019s influential Public Investment Corporation said it wanted BHP to significantly improve its offer for Anglo.<\/p>\n

At \u00a331.11, is the offer too risky now for BHP investors?<\/p>\n

RBC\u2019s Kaan Peker suggests so, saying the new bid prices in synergies the investment bank just can\u2019t find in the pursuit of Anglo\u2019s Los Bronces, Quellaveco and Collahuasi copper mines.<\/p>\n

\u201cWhen accounting for Synergies and the undisturbed AAL valuation, we get a price of \u00a325.6-27.4\/sh. Today\u2019s offer of \u00a329.34\/sh (on undisturbed pre-bid Anglo and BHP prices), is well above the top-range of what we see as being value accretive,\u201d Peker said.<\/p>\n

\u201c\u2026we estimate the revised final offer factors in synergies in excess of ~US$7b, plus operational recovery and long-term growth projects (that may or may not eventuate) from AAL\u2019s key assets such as Los Bronces, Quellaveco and Collahuasi. We believe there is too much project and Synergy execution risk in our view.<\/p>\n

\u201cFinal Offer Ratio is conditional. We think that none of the conditions have been met at this point in time, and this has to be considered the \u201cFinal Ratio\u201d, suggesting BHP will no longer bid against itself (at least for a set period of time), but may in-fact mean it can make a supplementary cash offer.\u201d<\/p>\n

\u00a0<\/p>\n

And that\u2019s tanked the ASX materials sector<\/h2>\n

BHP is around 10% of the ASX 200 and even more of the materials index, with its pounding sending the sector 2.24% lower.<\/p>\n

And it wasn\u2019t the only big miner getting towelled up, with iron ore compatriots Rio Tinto (ASX:RIO)<\/strong><\/a> and Fortescue (ASX:FMG)<\/strong><\/a> also big losers as Singapore iron ore futures fell more than 2.5% off yesterday\u2019s two month highs of more than US$120\/t.<\/p>\n

Stats from the World Steel Association showed global crude steel output fell 5% YoY to 155.7Mt in April.<\/p>\n

Base metals also fell heavily with both copper and nickel down over 4%.<\/p>\n

\u201cProfit taking accelerated in the copper market amid the risk-off tone across markets,\u201d ANZ Research\u2019s Adam Boyton, Brian Martin and Daniel Hynes said.<\/p>\n

\u201cThe red metal has gained more than 22% this year, with the rally accelerating in recent weeks as a rush of investors bet on a tightening global market.<\/p>\n

\u201cHowever, signs of lacklustre demand in China were enough for some to close out bullish positions and lock-in profits.<\/p>\n

\u201cChinese copper rod producers have cut or stopped production due to slowing sales, according to Mysteel Global.\u201d<\/p>\n

TEN-BAGGER: READ: Peak copper, weak nickel may be a sign to pivot<\/a><\/p>\n

\u00a0<\/p>\n

Today\u2019s Best Miners <\/strong><\/strong><\/h2>\n

Energy Resources of Australia (ASX:ERA)<\/a><\/strong> (uranium) +2.1%<\/p>\n

Patriot Battery Metals (ASX:PMT)<\/strong><\/a> (lithium)\u00a0 +1.1%<\/p>\n

Tietto Minerals (ASX:TIE)<\/strong><\/a> (gold) +0.8%<\/p>\n

\u00a0<\/p>\n

Today\u2019s Worst Miners <\/strong><\/strong><\/h2>\n

Regis Resources (ASX:RRL)<\/strong><\/a> \u00a0(gold) -7.6%<\/p>\n

<\/strong>Bellevue Gold (ASX:BGL)<\/strong><\/a> <\/strong> (gold) -6.7%<\/p>\n

Sandfire Resources (ASX:SFR)<\/strong><\/a> (copper) -6.4%<\/p>\n

Capricorn Metals (ASX:CMM)<\/strong><\/a> (gold) -5.3%<\/p>\n

\u00a0<\/p>\n

Monstars share prices today<\/h2>\n\n

<\/span>\u00a0<\/p>\n

\u00a0<\/p>\n

ASX 300 Metals and Minings Index today<\/h2>\n\n

<\/span>\u00a0
\n<\/span><\/p>\n

The post Monsters of Rock: Is there too much risk in BHP-Anglo deal?<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

BHP puts its foot in the door at Anglo, securing a one-week extension to improve the terms of its offer Anglo American\u2019s board knocked back [more…]<\/a><\/p>\n","protected":false},"author":0,"featured_media":10052,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-10051","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nMonsters of Rock: Is there too much risk in BHP-Anglo deal? - Economic Herald<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/economicherald.net\/?p=10051\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monsters of Rock: Is there too much risk in BHP-Anglo deal? - Economic Herald\" \/>\n<meta property=\"og:description\" content=\"BHP puts its foot in the door at Anglo, securing a one-week extension to improve the terms of its offer Anglo American\u2019s board knocked back [more...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/economicherald.net\/?p=10051\" \/>\n<meta property=\"og:site_name\" content=\"Economic Herald\" \/>\n<meta property=\"article:published_time\" content=\"2024-05-23T06:39:35+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=10051#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=10051\"},\"author\":{\"name\":\"\",\"@id\":\"\"},\"headline\":\"Monsters of Rock: Is there too much risk in BHP-Anglo deal?\",\"datePublished\":\"2024-05-23T06:39:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=10051\"},\"wordCount\":692,\"publisher\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=10051#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2024\\\/05\\\/GettyImages-1301883367-e1716445944760-PmRFgd.jpeg\",\"articleSection\":[\"Finance\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=10051\",\"url\":\"https:\\\/\\\/economicherald.net\\\/?p=10051\",\"name\":\"Monsters of Rock: Is there too much risk in BHP-Anglo deal? 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