News that mega-mergers are in the air as Anglo American PLC (LSE:AAL) absorbs Canada's Teck Resources Ltd (TSX:TECK.B, NYSE:TECK) has lifted the shares of both companies and others in the mining sector.
Shares in Anglo leapt 7.8% in London, while Teck's New York-listed stock surged over 23%.
Fellow FTSE 100 names were carried higher on the whiff of M&A activity, with Glencore PLC (LSE:GLEN) rising 3.2%, Antofagasta PLC (LSE:ANTO) climbing 2.2%.
On the FTSE 250, copper-focused Atalaya Mining (AIM:ATYM, TSX:AYM) was up 3.1%.
Rio Tinto and BHP were both lower, however, with BHP having reached a legal settlement over a shareholder class action.
The Anglo Teck merger will be the largest mining deal in recent years, said market analyst Kathleen Brooks at XTB.
"There has also been concern about miners overpaying for acquisitions; however, Teck’s shares had fallen this year, so Anglo could dodge that criticism."
The deal is another "strategic pivot" by Anglo to cement copper at the heart of its portfolio, says Matt Britzman at HL, with the deal giving it over 70% exposure to the orange metal and a top-five global position.
"But the real prize is growth optionality, leveraging a pipeline of brownfield and greenfield projects across the Americas," he said.
For Anglo investors, a $4.5 billion special dividend sweetens the near-term picture and is no doubt a boost for the shares, though Britzmaq says the long-term upside "hinges on execution and a green light from the regulator".
John Meyer at SP Angel said the Anglo Teck merger as well as the suspension of one of the world’s largest mines (Freeport's Grasberg) were lifting the copper price.
The merger is "excellent" news for Anglo but the creation of a $53 billion-plus giant will only make it more attractive as a takeover target, according to JP Morgan
Both Anglo and Teck Resources Ltd (TSX:TECK.B) have been the subject of failed takeover attempts, with Anglo rejecting BHP's advances in 2024 and Teck from Glencore in 2023.
JPMorgan analyst Dominic O'Kane said he believes the combination is "strategically excellent for Anglo American; it will unlock significant value and re-asserts control of Anglo’s strategic destiny".