London-based mining company Anglo American confirmed on Thursday it is evaluating a combination proposal received from Australian mining giant BHP, Kallanish reports.

The unsolicited, non-binding and “highly conditional” deal comprises an all-share offer for Anglo American by BHP, Anglo explains. It would be preceded by separate demergers by Anglo of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore to Anglo shareholders. The two parts of the proposal would be inter-conditional.

The potential takeover could still face antitrust hurdles in copper, as the red metal is a critical mineral. The business is also the most desirable within Anglo, as it consists of Tier-1 assets in low-risk jurisdictions, with organic growth, Jefferies analysts point out in a note.

“It is not clear that the merged company would have non-core copper assets to divest as a proposed remedy. Los Bronces has operational upside, and BHP is clearly unlikely to sell its recently formed Copper South Australia business. Collahuasi, Quellaveco, Escondida, Pampa Norte, and Antamina would almost certainly be core as well,” they add. “We would assume there would be multiple interested parties in this business.”

Anglo said in a statement its board is currently reviewing the proposal with advisers, though it noted that there can be no certainty that any offer will be made. The company has not disclosed the value of the offer, and said a further announcement will be made “as and when appropriate.”

BHP has said that Anglo shareholders would receive 0.7097 BHP shares, as well as Anglo’s shares in Kumba and Amplats in a deal that values Anglo American at £31.1 billion ($38.9 billion) or £25.08 per Anglo share based on the current BHP share price.

Christopher LaFemina, chief financial analyst at Jefferies, and his team estimate a “fair value” to get Anglo’s attention would be £28/share, which equates to a $42.6 billion equity value. “This is 28% above the most recent Anglo share price, and we believe it is a reasonable starting point in estimating what price might be enough to get a deal across the finish line,” he adds.

As per the UK Takeover Code’s “put up or shut up” deadline, BHP has until 5pm on 22 May to disclose its intention to make an offer. If the Australian miner continues to pursue the deal, Jefferies expects other bidders to emerge.

Potentially, Anglo could also propose demerging Amplats and Kumpa, spin off De Beers (diamond), sell met coal, sell Minas Rio (iron ore), and then sell the copper assets (along with nickel and manganese). This could unlock significant value, says LaFemina. “None of this is simple, but we believe there is value in Anglo that is not currently fully reflected in its share price,” he concludes.

“Copper is in demand for the energy transition, and BHP will be trying to tie their share price to the energy transition with the bid for Anglo. BHP benefited from a similar macro trend with iron ore and Chinese industrialisation in the 2000s; it makes sense to try and repeat this,” comments Andy Leyland, co-founder of SC Insights. “Both companies have deep expertise in the copper sector, and some great assets. Hopefully a tie-up will increase, not decrease, much needed capital investment in the sector.”