The $35 billion acquisition of Teck Resources initiates a revaluation of valuations; Anglo American (AAUKF.US) receives an "Outperform" rating from Scotiabank.

According to Golden Ten Data, Scotiabank has initiated coverage of Anglo American (AAUKF.US), assigning an “Outperform” rating and setting a target price of £52 per share. The institution believes that following its approximately $35 billion acquisition of Teck Resources, Anglo American’s focus on copper—particularly the company’s attractive and lower-risk medium-term copper growth outlook—positions its shares for a significant re-rating.

Scotiabank analyst Orest Wovkodaf stated that the merged “Anglo American-Teck” entity holds a portfolio of large-scale, long-life Tier 1 mining assets in the Americas, which could potentially make it an acquisition target for one of the world’s leading diversified mining giants.

The analyst projects that the combined company’s headline net debt will be $11.6 billion (equivalent to $6.71 per share) by the end of 2026, and decrease to $7 billion (equivalent to $4.02 per share) by the end of 2027, at which point the net debt-to-EBITDA ratio will be just 0.5 times.

Wovkodaf forecasts that despite the need to fund substantial copper business growth, the company will generate strong free cash flow of $4.4 billion and $4.5 billion in 2027 and 2028 respectively—with free cash flow yields of 4.6% and 4.6%, compared to sector averages of only 3.7% and 4.2%. This is likely to support a lucrative future shareholder returns program pending completion of the transaction.