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    BHP Anglo Bid

    Hi MM, Noting your positive view on the BHP bid for Anglo i would be interested in your thoughts on the less positive views put forward by another broker this week. This broker is concerned BHP is looking to acquire a diversified miner in Anglo primarily to secure the copper assets but would then look to sell the non-copper assets - iron ore, platinum, nickel etc. The broker notes BHP's track record in selling assets is very poor and argues "this is like BHP trying to buy a 6 bedroom house just to get the garage. There are multiple large risks in BHP long term in trying to sell off the assets they don't want." Would you please provide your thoughts on this broker's views? Thanks & Regards TH

    Answer

    Hi Tim,

    We read the same article written by Angus Aitken in the AFR. Obviously differing opinions is what makes a market but we think his analogy is very skewed, not many 6-bedroom homes have 25% of their value tied up in the garage!

    • In 2023 around 25% of Anglo American (AAL LN) revenue came from copper.

    We have never said the deal wasn’t a touch messy with BHP looking to sell off AAL’s non-core South African assets but that’s why MM believes its important that “The Big Australian” doesn’t over-pay to secure AAL’s prized copper assets.

    • In 2023 over 30% of AAL’s revenue came from diamonds & platinum that BHP would be looking to sell.
    • Hence we wouldn’t want to see BHP increase its bid for AAL by more than 10% – unlikely in our opinion.

    MM remains keen to add to our BHP position around $40.

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