BHP must take up the offer to the next level

30% more

XM has informed that according to JPMorgan analysts, BHP would need to increase its latest offer by around 30% to reflect the fair value for Anglo American and its key copper assets.

The analysts raised their share price target for Anglo to £27.75 per share after reassessing the value of its copper assets. They noted that the discount for the shares to the implied value of BHP’s offer was at its highest level, indicating that the market views a deal as unlikely.

Previous bids

Anglo has turned down two earlier bid proposals. Under UK takeover rules, BHP must make a firm offer by May 22 or walk away. BHP’s latest proposal was £27.53 per share, up from £25.08 previously.

JPMorgan analysts stated that: „Anglo’s shares now trade at the greatest discount (-13.6%) to the implied value of BHP’s offer, implying that the market assigns a low probability to BHP’s ability to raise its offer and achieve an agreed deal”

Scenarios

Moreover, XM, provides that in a 20% change of control scenario, the analysts estimate Anglo American plc at approximately £32 per share (approximately $50bn), or Anglo plc Rump (the entity BHP is seeking to acquire) at $39bn (£24.79), ~30% higher than the value of BHP’s current offer.