Australian copper, nickel, and, gold miner OZ Minerals [ASX:OZL] rose 34% on Monday after turning down BHP’s $8.3 billion takeover offer.
OZ Minerals has decided not to go ahead with the deal, feeling the offer was ‘highly opportunistic’ on BHP’s part and undervalued OZL’s ‘unique’ business attributes.
BHP’s indicative proposal was to acquire OZ Minerals for $25 a share.
While OZL shares spiked today — trading at the rejected offer price of $25.5 a share — OZL shares are down 10% year-to-date.
Source: www.tradingview.com
BHP makes its offer
Earlier this morning, both OZ Minerals and BHP Group released updates on the Indicative Proposal made by BHP to OZ for a non-binding acquisition of 100% OZ shares at $25 per share.
BHP described its offer as ‘an attractive premium’ of 32.1% to OZL’s closing price last Friday, and of 41.4% to OZL’s 30-day VWAP.
BHP said the offer was ‘materially above’ the average broker price targets, with BHP CEO Mike Henry noting:
‘Our proposal represents compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZL operational and growth related funding challenges.’
OZL, however, was unmoved.
OZL rejects BHP’s $8.3 billion offer
With the assistance of its financial and legal advisers, OZL’s Board unanimously determined that BHP’s offer ‘significantly undervalues OZ Minerals’.
The OZ Minerals Board also pointedly noted that the offer was ‘highly opportunistic’, coming at a time when global copper prices, along with OZL’s share price, have fallen from recent peaks.
OZL also believes the offer does not adequately reflect the potential of its copper and nickel assets, with OZL describing itself as ‘the only primary copper company in the ASX 100’.
OZ’s CEO, Andrew Cole, offered his thoughts:
‘We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand particularly for the global electrification and decarbonisation thematic and we have a long-life Resource and Reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes.’
Will BHP lob a higher offer for OZL?
OZL said it provides a unique investment proposition ‘as the only primary copper company in the ASX 100’.
The nickel and copper miner also cited a strong long-term outlook for copper and nickel markets.
OZ Minerals thinks it is highly leveraged to ‘increasing geological scarcity, global electrification and accelerating decarbonisation’.
The miner also pointed out that it has ‘consistently traded above the proposed offer price’ over the last year.
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Regards,
Kiryll Prakapenka
