Australian mining company OZ Minerals (OZL) has turned down a takeover bid of A$8.34bn ($5.8bn) from BHP Group citing that the proposed deal significantly undervalues its business.
As per the non-binding indicative proposal submitted by BHP Group to OZ Minerals’ board, the former offered to acquire all of the latter’s shares for A$25 ($17.4) per share in cash.
OZ Minerals is focused on developing a portfolio of long life, low-cost copper-focused assets. The company has two operating assets, which include the Prominent Hill copper mine and the Carrapateena copper mine in Australia.
The company’s board has determined unanimously that BHP Group’s proposal not only undervalues the business considerably but is also not in the best interests of shareholders.
According to OZ Minerals’ board, the offer does not take into account the unique nature of the company’s core business which comprises a “high-quality” portfolio of copper and nickel assets in a Tier-1 mining jurisdiction with long mine lives.
OZ Minerals managing director and CEO Andrew Cole said: “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.”
The board accused the proposal to be very opportunistic as it came when the LME copper price and the company’s share price have dropped from their recent peaks in March and January, respectively.
The proposed deal would be subject to financial, technical, legal, and operational due diligence, which will be very extensive, said OZ Minerals.
It will also be subject to multiple financial assumptions and various other conditions, said OZ Minerals.
BHP Group stated that its offer is a premium of 32.1% to OZ Minerals’ closing price of A$18.92 ($13.16) per share on 5 August 2022.
The mining major said that its cash offer would provide immediate value to OZ Minerals’ shareholders and de-risk any value which eventually may or may not be reflected in the latter’s share price.
BHP CEO Mike Henry said: “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.
“We are disappointed that the Board of OZL has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal.”
