Anglo American has received a takeover offer from Australian mining firm, BHP, for £31bn.

BHP said it would offer a 31% premium of £25.08 per share to Anglo American shareholders.

The British multinational firm owns mines in countries including Chile, Brazil, South Africa, and Australia, and added that it was reviewing the "unsolicited, non-binding and highly conditional" proposal from BHP.

The deal, if agreed, could create a group that would own around 10% of the global output of copper, which is now one of the world's most sought-after metals.

Investment analyst at AJ Bell, Dan Coatsworth, said: "Anglo American was a sitting duck after the sharp decline in its share price last year. The firm saw its market value shrink by 39% in 2023 due to operational setbacks, weaker commodity prices and downgraded production guidance. That provided an opportunity for a larger rival to pounce on the business, taking a long-term view that its assets have considerable value and any short-term operational issues can be fixed. BHP has been the one to step up to the plate.

"BHP has a clear idea what it wants from buying Anglo American – exposure to large, low-cost and long-life assets in iron ore, metallurgical coal, potash and copper. Scale matters in the mining sector and Anglo has the right kind of assets to keep BHP generating big bucks for decades into the future."

Reuters reported that following the announcement, shares in Anglo American were up by 13.7% at £25.06.

However, analysts have noted that if the deal goes ahead, Anglo American will be the latest firm to leave London, becoming one of many to do so in recent months.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, added: "The FTSE 100 may have raced to fresh highs this week, but it’s been a long time coming, and UK-listed companies are still considered to be undervalued. Anglo American’s share price is down around 10% compared to a year ago, which is likely to have helped spark the offer. The premium offered by overseas buyers swooping on London-listed firms is seen as evidence that UK assets are still cheap, having been languishing as a result of the Brexit-effect and the sluggish performance of the UK economy.

"Although listing reforms are in process, and a charm offensive has been launched by the Government to lobby more firms to list in London, pressure is likely to pile up for more concerted action to be taken."

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