Mega-energy resources firm BHP Group [ASX:BHP] has officially put in its last — and its ‘best’ — offer for a 100% takeover of mining company OZ Minerals [ASX:OZL], an improved cash price of $28.25 per OZL share.
As it stands, OZL’s board is heavily leaning in favour of BHP’s latest bid, a significant increase on the previous $25 a share rejected in August.
OZ Minerals shares lifted 4% today, whereas BHP shareholders have been a little more reserved.
Year-to-date, OZL’s share price has slipped just over 3%.
BHP has risen 19% in the year so far.
Source: TradingView
A well-considered transaction
Today, OZ’s board is showing support for BHP’s newest non-binding indicative proposal, giving shareholders the green light to vote in its favour.
BHP upped the ante by raising its offer price to $28.25 a share — cash — in the form of a scheme of arrangement.
Previously, BHP offered to purchase OZ at $25 a share, worth $8.37 billion, which OZL rejected, calling the proposal one that ‘significantly undervalued’ its assets.
‘This offer price represents the best and final price BHP is willing to offer under the Revised Proposal, in the absence of a competing proposal’, OZL stated today.
The Revised Proposal, at the price of $28.25 a share, now represents an enterprise value of $9.6 billion, and includes the following premiums:
- ‘3% to OZL’s closing price of A$18.92 per share on 5 August 2022, being the last trading day prior to the initial proposal by BHP
- ‘8% to OZL’s 30-day VWAP of A$17.67 per share up to and including 5 August; and
- ‘a 13.0% increase to BHP’s original offer price of A$25.00 per share.’
OZL will be employing an independent expert to check over specifics and to ascertain whether it is in shareholders’ best interests.
BHP will have four weeks from 21 November to complete exclusive due diligence, and to construct a binding SIA (scheme implementation agreement) as agreed under a Confidentiality and Exclusivity Deed.
OZ will have the opportunity to pay franked dividends to its shareholders before the transaction. If it chooses to do so, the proposal’s cash consideration price will reduce accordingly.
OZ Minerals’ Chairman Rebecca McGrath commented:
‘The Revised Proposal from BHP follows a period of Board-level engagement, securing a circa $1.1 billion increase to the Initial Proposal. It is the Board’s view that progressing the Revised Proposal, including providing BHP with access to due diligence, is in the best interests of OZ Minerals’ shareholders and other stakeholders.’
A transaction to benefit all
The certainty of the proposal progressing into a guaranteed transaction is as yet unknown, but both OZ and BHP believe it to provide significant benefits to their respective shareholders.
BHP believes its shareholders can expect to enjoy increased ‘exposure to future facing commodities’, ‘attractive synergies’ and a ‘pipeline of growth options’, whereas OZL shareholders should receive reassurance at a time of macroeconomic turmoil.
BHP CEO Mike Henry said:
‘The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development.’
Provided the due diligence, SIA and shareholder voting results with satisfaction, the transition will be put to authorities and Australian court approval — a process that could take at least six months.
An incoming boom for commodities
Forget OZL and BHP for a moment — there are plenty of commodities investors are currently neglecting.
Our new resources expert and trained geologist James Cooper thinks the Australian resources sector is set to enter a new commodities boom brought on by the ‘Age of Scarcity’.
James is convinced ‘the gears are in motion for another multi-year boom in commodities’.
A boom where Australia (and ASX stocks) stands to benefit.
You can access a recent report by James on exactly that topic, AND access an exclusive video on his personalised ‘attack plan’, right here.
Regards,
Mahlia Stewart,
For Money Morning
