OZ Minerals rejects BHP’s $8.3b takeover offer

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By Danica Cullinane - 
OZ Minerals BHP takeover offer ASX OZL copper nickel

The board of OZ Minerals says BHP’s indicative proposal doesn’t adequately reflect its “unique” asset portfolio and strong long-term growth potential.


OZ Minerals (ASX: OZL) has turned down an $8.4 billion takeover bid by mining giant BHP (ASX: BHP) as it claims the offer significantly undervalues the company.

Before the weekend, BHP made a conditional and non-binding indicative proposal to acquire all the miner’s shares for a cash price of $25 per share via a scheme of arrangement.

BHP has already accumulated OZ Minerals shares via derivative instruments amounting to a stake of less than 5%.

OZ Minerals managing director and chief executive officer Andrew Cole said the board carefully assessed the offer with the help of financial and legal advisors, concluding that it “significantly undervalues” the company and is 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.

In response to the rejection, BHP chief executive officer Mike Henry said he was “disappointed” that the board of OZ Minerals is not willing to entertain the company’s “compelling” offer or provide BHP with access to due diligence in relation to its proposal.

“Our proposal represents compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZ Minerals operational and growth-related funding challenges,” he said.

OZ Minerals board calls bid inadequate compensation

BHP’s offer of $25 per share represented a 32.1% premium to OZ Minerals’ Friday closing price of $18.92 per share and a 41.4% premium to the miner’s 30-day volume weighted average price (VWAP) of $17.67 per share.

However, OZ Minerals said in a statement on Monday that BHP’s proposal did not adequately compensate shareholders for the “unique” nature of the company’s core business of high-quality copper and nickel assets in a tier-one mining jurisdiction with long mine lives, first quartile cost positioning and extensive strategic optionality.

OZ Minerals also noted it is the only primary copper company in the ASX100 and its assets have a comparatively low carbon intensity with plans for further decarbonisation to meet a target of net zero scope one and two operational emissions by 2030.

Other aspects the company said the bid didn’t adequately reflect is strong and consistent returns which have delivered a total shareholder return of about 145% over the past five years, and the high-quality nature of its growth projects, including West Musgrave (with a financial investment decision scheduled for this second half-year) and the Carrapateena Block Cave and the Prominent Hill extension, which are expected to generate significant production growth over the next five years.

In addition, OZ Minerals said it would deliver “significant” synergies and benefits to BHP including operational synergies in South Australia (between Olympic Dam, Carrapateena and Prominent Hill) and Western Australia (between Nickel West and West Musgrave), and the opportunity for BHP to grow and diversify its global copper portfolio.

Bid comes at a time of falling copper prices

In Monday’s statement, OZ Minerals also called BHP’s offer “highly opportunistic” as it comes at a time when the London Metals Exchange (LME) copper price and its own share price have fallen from recent peaks in the first half of 2022.

While BHP described the offer as “compelling” for being a 41.4% premium to OZ Minerals’ 30-day VWAP, OZ Minerals noted it was only 13.1% higher than the company’s VWAP in the last six months.

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

OZ Minerals confirmed shareholders do not need to take any action in relation to the proposal.

The company appointed Macquarie Capital and Greenhill & Co as financial advisers and Gilbert + Tobin as legal adviser in relation to the proposal.