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BHP (A1/A-): Anglo Offer Confirmed

BASIC INDUSTRIES

• All share offer (0.7097 BHP shares) with proportional shares in Amplats and Kumba.

• Equates to around £25 per Anglo share, a 13% premium to the closing price.

• Values Anglo equity at £31.1bn. The premium looks modest on the face of it and we would expect Anglo to push for better terms .

• Clearly credit positive for AALLN (Baa2/BBB) and negative for BHP if the deal goes through, with the curves 30-40bp apart.

• We would not expect anything like full convergence for now given the modest premium.

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