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OZ knocks back BHP takeover advances

OZ

OZ Minerals has rejected a takeover bid from BHP Group for $25 per share in cash via scheme of arrangement.

The Indicative Proposal was subject to a number of conditions including:
• the completion of extensive financial, legal, technical and operational due diligence over a proposed six-week timeframe
• various financial assumptions
• a unanimous recommendation of the OZ Minerals Board
• entry into a scheme implementation agreement subject to a range of conditions including no material adverse change, regulatory, shareholder and court approvals and conduct of business restrictions.

The Board had also been advised by BHP that it had accumulated an interest in OZ Minerals shares via derivative instruments amounting to an interest of less than 5 per cent.

OZ Minerals managing director and chief executive officer Andrew Cole said the Board had unanimously determined that the Indicative Proposal significantly undervalued OZ Minerals and, as such, was not in the best interests of shareholders.

“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,” he said.

The Board considered that the Indicative Proposal does not adequately compensate shareholders for:
• the unique nature of OZ Minerals’ core business, which represents a high-quality portfolio of copper and nickel assets, located in a Tier 1 mining jurisdiction with long mine lives, first quartile cost positioning and extensive strategic optionality
• the unique investment proposition which OZ Minerals provides as the only primary copper company in the ASX100
• the low carbon intensity of OZ Minerals’ assets relative to its peers with a defined and market-leading plan for further decarbonisation to meet our target of net zero Scope 1 and 2 operational emissions by 2030
• the high-quality nature of OZ Minerals’ growth projects which include the West Musgrave Projected for H2 2022), the Carrapateena Block Cave and the Prominent Hill extension which together are expected to generate significant production growth over the next 5 years
• the strong long-term outlook for both the copper and nickel markets underpinned by increasing geological scarcity, global electrification and accelerating decarbonisation, to which OZ Minerals is highly leveraged
• the strong and consistent returns that the OZ Minerals management team has delivered with a total shareholder return of about 145 per cent over the past five years.

In addition to the above, OZ Minerals would deliver significant synergies and other benefits to BHP which the Board considers are not reflected in the value of BHP’s Indicative Proposal. These include:
• operational synergies in both South Australia (between Olympic Dam, Carrapateena and Prominent Hill) and in Western Australia (between Nickel West and West Musgrave)
• the significant growth and diversification opportunity OZ Minerals represents for BHP’s global copper portfolio

The Board also considered that:
• the Indicative Proposal was highly opportunistic and has come at a time when the LME copper price and OZ Minerals share price have fallen from their recent peaks in March and January respectively
• OZ Minerals has consistently traded above the proposed offer price for the equivalent of more than five of the last 12 months

BHP chief executive officer Mike Henry said the proposal represented 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 offer or provide us with access to due diligence in relation to our proposal,” he said.

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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