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BHP (NYSE:BHP) would need to improve its acquisition offer by ~30% to reflect fair value for Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY) and its key copper assets, J.P. Morgan analysts said Friday, according to Reuters.
JPM raised its Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) stock price target to £27.75/share after re-examining the value of its copper assets, and said the discount for the shares to the implied value of BHP’s (BHP) offer was at its highest level, implying the market sees a deal as unlikely.
“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,” the bank said.
“In a 20% (change of control) scenario, we estimate Anglo American at ~£32/share (~$50B), or Anglo Rump (the entity BHP is seeking to acquire) at $39B (£24.79), ~30% higher than the value of BHP’s current offer,” JPM says.
Earlier this week, Anglo (OTCQX:AAUKF) (OTCQX:NGLOY) rejected an improved £34B (~$43B) proposal from BHP (BHP).