Oz Minerals rejects BHP’s ‘opportunistic’ $8b takeover bid

South Australian copper and nickel miner Oz Minerals has knocked back a takeover bid from global mining giant BHP, saying the $8b offer is undervalued and not in the best interests of shareholders.

Aug 08, 2022, updated Aug 08, 2022
Oz Minerals' Prominent Hill mine. Photo: Supplied

Oz Minerals' Prominent Hill mine. Photo: Supplied

Oz Minerals’ board led by Rebecca McGrath said the offer arrived at a time when world copper prices along with Oz Minerals’ share price had fallen compared to recent peaks in March and January.

“The Board has unanimously determined that the Indicative Proposal significantly undervalues OZ Minerals and, as such, is not in the best interests of shareholders,” the company said in a statement this morning.

“Oz Minerals has consistently traded above the proposed offer price for the equivalent of more than five of the last 12 months.”

BHP’s non-binding indicative proposal to the Oz Minerals board on August 5 aimed to secure 100 per cent of the company’s shares at $25.00 each – a 32 per cent premium on the company’s last trading price of $18.92.

Oz Minerals is a major player in the South Australian mining sector and operates South Australian copper-gold mines at Prominent Hill and Carrapateena. It also has mines in Brazil.

The company shifted its head office to Adelaide with a $10 million grant from the SA Government in 2015, with Oz Minerals making its own $18 million commitment to the partnership.

A government spokeswoman said there would be no requirement for the taxpayer funds committed to the move to be repaid if a future takeover deal is successful.

“Oz Minerals has fulfilled its obligations under the grant to move its headquarters to Adelaide,” she said.

“As of today, Oz Minerals has rejected the BHP offer.”

BHP’s offer to buy the copper and nickel miner is its latest push to secure more supplies of raw materials that will be increasingly needed to build electric vehicles and clean energy infrastructure.

BHP chief executive officer Mike Henry voiced disappointment in the Oz Minerals decision.

“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,” he said.

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“We are disappointed that the Board of Oz Minerals 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.”

Oz Minerals managing director Andrew Cole said the BHP offer failed to adequately compensate shareholders for the “unique nature” of the company’s core business.

“We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations,” Cole said.

“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.”

Oz Minerals ranked as the second biggest South Australian company in the 2021 South Australian Business Index.

The company recorded a net profit of $531 million for the 2021 calendar year, however its second quarter report this year reflected on copper production being affected by COVID-related challenges with staff and supply chain, along with weather conditions at its SA assets.

“A stronger operational performance is expected over the second half of the year at our Australian assets with remediation plans being actioned,” Cole said in his July report

“Whist the copper price has weakened recently, the medium to long-term outlook remains strong for minerals linked to the renewable energy industry, like copper and nickel.

“Our focus for 2022 remains on safely delivering our operational targets, advancing our current growth projects and adding new growth options to the portfolio while we continue to strengthen our unique company culture, placing us in a positive position against forecast demand trends.”

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