BHP needs to bid about $41 a share for Anglo, JPMorgan says

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BHP Group (ASX: BHP) would need to boost its latest offer around 30% to reflect fair value for Anglo American (LON: AAL) and its key copper assets, JPMorgan analysts said in a note.

They raised their price target for London-listed Anglo to 27.75 pounds a share after reexamining the value of its copper assets, and said the discount for the shares to the implied value of BHP's offer was at its greatest level, implying the market sees a deal as unlikely.

Why it's important

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

Key quotes

"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," JP Morgan analysts said.

"In a 20% (change of control) scenario, we estimate Anglo American plc at ~£32/sh (~$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."

By the numbers

The analysts increased their December 2025 fair value for Anglo Copper by 25% to $27 billion (17.47 pounds per share) and increased their Anglo price target to 27.75 pounds per share from 26 pounds previously. That factored in their copper reassessment, as well as $4 billion lower capital spending (capex) forecast over 2025 due to the cessation of development capex at the Woodsmith crop nutrient project.

Context

On Monday, Anglo rejected an improved 34 billion pound ($43 billion) proposal from BHP, saying BHP "continues to significantly undervalue" its business. BHP has proposed Anglo divest its South African platinum and iron ore assets as a pre-condition to an offer for the rest of the company.

Anglo and BHP did not immediately comment on the report.

(Reporting by Anousha SakouiEditing by Mark Potter)

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