BHP shares fell 4% after the company made a $39 billion bid for rival Anglo American.

Scott Murdoch and Melanie Burton

(Reuters) – BHP Group shares fell 4% on Friday in its first day of trading in Australia after the company unveiled a $38.8 billion bid for smaller rival Anglo American (JO:) in a deal to form the world’s largest miner.

BHP said it would offer 25.08 pounds ($31.39) per Anglo share, a 31% premium over the stock’s closing price before the bid was made public on Thursday.

Anglo shares rose 16.1% to 25.60 pounds in London trading on Thursday.

BHP’s shares fell as much as 4.5% in morning trading on Friday. With the Australian stock market closed for trading on Thursday due to the holiday, Friday’s trading meant it was investors’ first reaction to the large takeover plans.

“Concerns about Chinese growth and a slowing commodity outlook are leading the market to conclude that this is the peak of a cyclical trade and that BHP is overpaying,” said John Milroy, private wealth adviser at brokerage Ord Minnett. mentioned.

The benchmark S&P/ASX200 index was down 1.3% in early trading.

BHP has until May 22 to make a binding bid. Citing sources, Reuters reported that there was already initial opposition from Anglo executives who did not consider the offer attractive enough.

If successful, the deal would be the largest mining acquisition globally in 2024 and rank among the top 10 largest deals of all time in the sector, according to LSEG data.

Under the plan, BHP plans to spin off Anglo’s iron ore and platinum assets in South Africa, where the world’s largest listed miner is not active.