The board of Adelaide-based mining company OZ Minerals (ASX: OZL) intends to recommend a revised takeover proposal from BHP Group (ASX: BHP) that values the business at $9.6 billion.
Having knocked back a lesser bid in August, OZ Minerals has today told shareholders that it will back the bid once BHP - one of the world’s top commodities producers - conducts due diligence.
The revised proposal of $28.25 per OZL share represents a 13 per cent increase compared to the initial proposal of $25 per share, which was rejected on the basis it undervalued the mining company.
This latest bid is BHP’s ‘best and final price it is willing to offer’, and allows copper-focused OZ Minerals to consider paying a franked dividend to shareholders prior to the transaction being implemented.
“After carefully assessing the revised proposal, the board of OZ Minerals has agreed to grant BHP the opportunity to conduct due diligence for four weeks on an exclusive basis and to work cooperatively towards entry into a scheme implementation agreement with BHP,” OZ Minerals said.
“Subject to agreement of an acceptable binding scheme implementation agreement, the intention of the OZ Minerals Board is to unanimously recommend the Revised Proposal as being in the best interests of OZ Minerals’ shareholders in the absence of a superior proposal and subject to the independent expert’s recommendation.”
OZ Minerals chairman Rebecca McGrath said the revised proposal comes after a period of board-level engagement between the two companies, which secured a $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. The Board will continue to update shareholders as appropriate,” McGrath said.
The Adelaide-based company’s CEO Andrew Cole welcomed the revised proposal.
“BHP’s revised proposal is a clear reflection of OZ Minerals’ unique set of highly strategic, quality assets in quality jurisdictions and an enviable multigenerational growth pipeline of copper and nickel assets in strong demand due to global electrification,” Cole said.
“We look forward to working with BHP in a collaborative way to progress the Revised Proposal in the best interests of OZ Minerals’ and it's stakeholders.”
Likewise, BHP CEO Mike Henry welcomed the deal, which would create a South Australian copper basin due to the proximity of OZ Minerals’ Carrapateena and Prominent Hill operations with the suitor’s existing Olympic Dam asset and Oak Dam development resource.
“BHP’s proposal represents a highly compelling offer for OZL shareholders, providing certainty at a time of macroeconomic uncertainty and market volatility, and increasing risks for the industry,” 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.”
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