Investing.com-- Australian shares of BHP Group Ltd (ASX:BHP) fell sharply on Friday after the mining giant made a $39 billion bid for smaller peer Anglo American PLC (LON:AAL), a deal that could potentially create the world’s biggest copper miner.

BHP’s shares sank 4.4% to A$43.230. They also dragged the ASX 200 index more than 1% lower. 

The miner said in an announcement that it was offering 0.7097 shares for each share in Anglo, and that it was also proposing the divestment of two key platinum and iron ore mining stakes held by Anglo in South Africa- Anglo American Platinum Ltd (JO:AMSJ) and Kumba Iron Ore Ltd (JO:KIOJ). 

The deal represents a total share value of roughly GBP25.08 per share, and values Anglo at about GBP31.1 billion ($38.8 billion). Anglo’s shares shot up 16% on Thursday following reports of the deal, and ended the day above BHP’s offer price, at about GBP25.60. 

Reuters reported that Anglo’s directors did not consider the offer attractive, and that some analysts and investors also saw it as largely opportunistic. 

The offer came just months after Anglo initiated a strategic review of its assets following a 94% slide in annual profit and several asset writedowns, amid weakening global commodity demand. China has been a major source of this weakness. 

But after Thursday's gains, Anglo American's London shares were trading up over 30% so far in 2024.

BHP’s offer comes as the world’s most valuable miner looks to expand its copper operations amid expectations that a global push into electrification and green energy will boost demand for the red metal. Copper is a key ingredient in electricity transmission infrastructure, and also plays a vital role in electric vehicle production. 

BHP’s takeover of Anglo could give the miner control over at least one-tenth of the world’s copper production. 

Copper prices hit a two-year high earlier in April on expectations of tighter supplies, after major Chinese refiners signaled production cuts and as Russian metal exports were slapped with stricter Western sanctions. 

But prices cooled in recent sessions after top producer Chile said it intended to increase output at state-owned copper miner Codelco.