BHP Group shares fell 4% on Friday a day after revealing a $38.8-billion bid for Anglo American as investors feared a deal could erode BHP's profitability especially if it has to sweeten its offer.

BHP said it would offer £25.08 per Anglo share, a premium of 31% from the stock's previous close before the bid was made public on Thursday.

Anglo shares rose 16.1% to £25.60 in London trading on Thursday.

BHP's shares fell as much 4.5% in early trading on Friday. The company's Australian stock did not trade on Thursday as the Australian share market was closed for a holiday. The benchmark S&P/ASX200 materials index was down 1.6%.

Questions about jurisdictional risks in South Africa and other regions, and concerns that Anglo American's businesses are lower margin than BHP's led to a share sell off, said RBC analyst Kaan Peker in Sydney.

"That uncertainty I think is resulting in a bit of a reduction on what investors are willing to pay for forward earnings," Peker said.

Some BHP investors also remained to be convinced over the merits of the deal.

"I am a bit surprised that the deal is not an agreed deal. It likely means BHP will need to offer more to win over shareholders and management and risks creating unhelpful animosity," said Portfolio Manager Brenton Saunders at Pendal.

"The deal is complicated in that Anglo has a complicated structure with a number of moving parts like AngloPlats, Kumba and De Beers. It’s not clear how BHP adds value to the deal if it is required to offer considerably more."

Consensus is growing that BHP will have to sweeten its offer to get the deal done. BHP has until May 22 to make a binding bid.

Anglo American's management does not consider a proposed $39-billion takeover offer from BHP Group, as attractive, two sources told Reuters, as some investors and analysts dismissed it as opportunistic.

BHP CEO Mike Henry and executives including CFO Vandita Pant will be briefing investors next week, fund managers said. BHP did not immediately respond to a request for comment on the meetings.

A deal, if successful, would be the largest mining takeover globally in 2024 and in the top ten largest deals for the sector ever, according to LSEG data.

Under its plan, BHP plans to spin out Anglo's iron ore and platinum assets in South Africa, where BHP, the world's largest listed miner, has no activities.