Investing.com -- BofA Securities upgraded miner Anglo American to "buy" rating, saying value has re-emerged after a pullback and a proposed merger with Teck would create a copper-focused company.
BofA set a price objective of 4,700 pence per share, based on 1x its sum-of-the-parts valuation, which adds up the value of each business. It assumes the Teck merger proceeds and includes risked values for near-term corporate and procurement synergies and longer-term ones at Collahuasi and Quebrada Blanca.
On a combined basis, BofA estimates the shares would trade at less than 7 times 2027 and 2028 estimated enterprise value to EBITDA, versus 8 to 15 times for copper peers.
The companies expect the merger to close by March 2027, subject to China anti-trust approval, which BofA called a key risk. Anglo and Teck have engaged with Chinese authorities and said talks are proceeding "as expected".
Reuters has reported that a multi-year offtake agreement could be enough to ease China's anti-trust concerns. BofA said forced asset disposals would make completing the deal more challenging.
BofA models near-term combined copper production of about 945,000 tonnes a year. Collahuasi in Chile, 44% owned by Anglo, is about 570,000 tonnes a year and one of the world's largest copper mines.
Adding QBII, about 240,000 tonnes a year and 60% owned by Teck, plus 175,000 tonnes a year of volume upside from operational synergies, could take the combined site to about 1 million tonnes a year, with Anglo Teck's equity share about 50%.
Other assets include Quellaveco in Peru (300,000 tonnes a year, 60% Anglo), Los Bronces in Chile (175,000 tonnes, 50% Anglo), Antamina in Peru (400,000 tonnes copper equivalent, 22.5% Teck) and Highland Valley in Canada (120,000 tonnes, 100% Teck).
Anglo is shedding non-core assets: coking coal and nickel sales are agreed, though nickel remains subject to anti-trust approval, while the De Beers diamonds sale is ongoing and challenged by pricing. BofA said it does not think any of these would derail perception of value in the combined company.
Original Article
BofA upgrades Anglo American as Teck merger boosts copper growth
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