Anglo American (JO:AGLJ) PLC (LSE:AAL) has confirmed it has received an all-paper bid approach from BHP (ASX:BHP) Ltd.
Terms of the offer were not disclosed, though Anglo, valued at £29 billion, said the deal would require the demergers of its platinum and iron ore businesses.
"The board is currently reviewing this proposal with its advisers," investors were told, as it cautioned: "There can be no certainty that any offer will be made nor as to the terms on which any such offer might be made."
Under takeover rules, BHP, which is valued at just shy of £120 billion, has until 5 pm on May 22 to lodge of formal offer.
If it goes ahead, the deal would be the biggest transaction in the sector since Glencore (LON:GLEN) and Xstrata's £43 billion merger 11 years ago.
Anglo's key holdings include copper mines located in Peru and Chile. The allure of these assets is magnified by the increasing global demand for copper, fueled by the shift towards renewable energy and electric vehicles.
"There would still be antitrust risk in copper, but there is a strategic rationale to this approach and structure," said the American investment bank Jefferies. "Other bidders could emerge."
In early trading, Anglo's stock was up 14% at 2,511.5p.
Jefferies reckons the fair value for the shares is 2,824p. "That is 28% above the [closing] Anglo share price, and we believe it is a reasonable starting point in estimating what price might be enough to get a deal across the finish line."
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