BHP makes $39 billion bid for Anglo American in mining mega play

Mining giant BHP Group on Thursday said it had made an all-share takeover offer for rival Anglo American, valuing the smaller company at £31.1 billion ($38.9 billion).

Anglo American shares were 13% higher at 10:05 a.m. in London.

The company confirmed it had received an "unsolicited, non-binding and highly conditional combination proposal," which it said it was reviewing with advisers.

Australia-based BHP, the biggest listed miner according to Companies Market Cap, said that the deal would deliver 0.7097 BHP shares per Anglo American share to Anglo American's ordinary shareholders.

BHP said the combination would optimize Anglo American's "assets and long-term growth potential" with its own "higher margin cash generative assets and growth projects along with its larger free cash flows and stronger balance sheet."

A combination of the firms would form a juggernaut in copper mining and the world's largest player in the space which would supply 10% of global output, according to a Reuters analysis. Anglo American has a huge copper operation based in South America and a production target for the metal of 730,000 to 790,000 tons in 2024. This compares with a copper output aim between 1.7 million and 1.9 million for BHP over the same period.

Mining firms are seeking to shore up copper supplies over the years ahead due to projected shortages and the metal's key role in the energy transition, with uses in electric vehicles, power grids and wind turbines.

Copper appears to be "the main prize that BHP is fighting for" due to its perceived future growth potential, Todd Warren, portfolio manager at Tribeca Investment Partners, told CNBC's "Street Signs Europe" on Thursday.

BHP in 2023 completed an acquisition of OZ Minerals, targeting its