BHP rebuffs OZ Minerals in $5.8 billion dealmaking

116
3
BHP rebuffs OZ Minerals in $5.8 billion dealmaking

The world's top miner returns to major dealmaking in a hunt for copper and nickel assets vital to the shift to electric transport and clean energy, as the Bloomberg BHP Group was rebuffed in a takeover approach by OZ Minerals Ltd.

According to Bloomberg calculations, the target of Melbourne-based BHP is valued at around A $8.4 billion $5.8 billion. Adelaide-based OZ Minerals said Monday that it was too low for a company with significant growth prospects in coveted commodities.

After years of caution following the industry's series of failed acquisitions, the proposal marks a return to multibillion dollar offers for BHP. The last major transaction for Petrohawk Energy Corp. was $12.1 billion in 2011, although it has since made smaller moves for copper and nickel assets.

OZ Minerals jumped 39% in Sydney since April 2001, the most since April 2001. The BHP's offer of A $25 a share was a 32% premium to the producer's closing price on Friday. BHP went up by 0.8%.

Read more: Vast Fortunes Will Be Made in Obscure Metals Behind Clean Power

RBC Capital Markets analyst Kaan Peker said the offer is compelling and aligns with BHP's strategy of increasing exposure to future facing commodities. BHP has the capacity to fund development of the OZ Minerals suite of growth projects at a time when a weaker copper price is adding to the risks for the smaller producer, he said.

BHP, which has been hived off its oil and gas assets this year, wants to add more growth in commodities tied to trends like low emissions transport and clean energy, particularly copper needed for renewables and nickel required for lithium-ion batteries. The producer is putting billions of dollars into a new potash mine in Canada to enter the fertilizer sector.

OZ Minerals Chief Executive Officer Andrew Cole said in a statement that they 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 global electrification and decarbonization thematic. OZ Minerals operates copper mines in South Australia, where BHP has its giant Olympic Dam operation and Oak Dam prospect, and also has nickel developments in Western Australia and in Brazil.

Cole, who was appointed in late 2014, has turned OZ Minerals into arguably one of the best copper companies in Australia and the world, according to Peter O Connor, an analyst at Sydney-based Shaw Partners Ltd. This M&A foray isn't over yet. Read more: How a Battery Metals Squeeze Puts EV Future at Risk: QuickTake

The smaller company said in its statement that BHP has an interest in OZ Minerals, though the stake is less than 5%. The goal has appointed Macquarie Capital and Greenhill Co. as financial advisers and Gilbert Tobin as legal adviser, according to OZ Minerals.

The proposal represents compelling value and certainty for the shareholders of OZ Minerals, BHP s CEO Mike Henry said in a statement, and the producer is disappointed that the board of directors of the target has not been willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal. None of the IVF patients are trapped in Limbo and Bracing for the Next Post-Roe Fight.