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BHP pushed back in $5.8 billion takeover bid for OZ Minerals

  • BHP made an A$8.34 billion bid for OZ Minerals on Friday
  • BHP CEO ‘disappointed’ by rejection
  • OZ Minerals shares rise after Monday deal announcement

Aug 8 (Reuters) – BHP Group (BHP.AX) was rebuffed in its A$8.34 billion ($5.8 billion) takeover bid for OZ Minerals (OZL.AX) on Monday, in a setback as it strives to secure copper and nickel assets for a transition to clean energy and the electric vehicle market.

Australia’s OZ Minerals said the unsolicited, conditional and non-binding indicative offer of A$25 per share significantly undervalued the nickel and copper miner and was “opportunistic” as it comes at a time when copper prices and the company’s stock price have fallen from recent highs. .

OZ extracts minerals that are in high demand, particularly for “global electrification and decarbonisation” and “we do not consider that BHP’s proposal sufficiently recognizes these attributes”, said OZ chief executive Andrew Cole .

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BHP’s offer marked a 32% premium to the closing price of OZ shares on Friday, when the latter had a market capitalization of A$6.3 billion, according to Refinitiv Eikon.

OZ shares jumped 34.1% on Monday after details of the deal and its rejection were made public.

The OZ bid by BHP, the world’s biggest listed miner, is its biggest play since it sold its oil assets last year.

The move signals BHP’s intention to diversify into metals like copper – essential in the energy sector for wind turbines, solar power systems and electric cables – as well as nickel used in lithium batteries -ion.

“We believe the offer is compelling and aligns with BHP’s strategy to increase exposure to forward-looking commodities,” RBC Capital said in its note.

“BHP has the balance sheet capacity to be able to develop all of OZL’s growth projects. The main risk for OZL shareholders is whether BHP remains disciplined, as we saw a bit with the transaction Noront.”

Last year, BHP sought to buy Canadian nickel producer Noront Resources, but later pulled out of the deal. Read more

Regarding OZ’s offer, BHP chief executive Mike Henry said he was “disappointed that the OZL board has indicated that they are not prepared to accept our compelling offer or provide access to due diligence on our proposal”.

WORTH THE OZ PURSUIT?

BHP said last week it would spend more on nickel exploration over the next two years and that a potential deal with OZ would give it access to projects such as West Musgrave in Western Australia, which has deposits nickel-copper. Read more

OZ said BHP’s offer did not reflect the value of potential operational synergies the companies could have in South Australia and Western Australia.

OZ’s copper assets are located near BHP’s Olympic Dam copper hub and its Oak Dam copper discovery in South Australia.

“This deal makes a lot of sense, and if BHP can still get OZ Minerals at a price it satisfies its board of directors, then it’s worth pursuing,” said a mining industry source, who does not didn’t want to be named because the person isn’t. authorized to speak to the media.

BHP did not say whether it would make a revised offer.

OZ also revealed that BHP had acquired less than a 5% stake in its shares through derivatives.

($1 = 1.4482 Australian dollars)

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Reporting by Shashwat Awasthi; Editing by Stephen Coates and Himani Sarkar

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