OZ Minerals spurns bid from BHP

$8.4bn not enough, says miner

MINING giant BHP has made a major play to expand its copper and nickel portfolio, lobbing an $8.4bn bid at $25 per share for OZ Minerals.

OZ Minerals said on Monday it had rejected the “unsolicited, conditional and nonbinding” offer from BHP on Friday.

The global miner had hoped to stitch up a friendly takeover through a scheme of arrangement.

Acquiring OZ Minerals would consolidate South Australia’s rich copper district, adding OZ Minerals’ Carapateena and Prominent Hill operations to BHP’s Olympic Dam. It would also give BHP an operating footprint in Brazil after significant work by OZ Minerals to get its South American operations into shape. And it would also give BHP another strong option in WA nickel ahead of OZ Minerals’ decision over whether to build a new base metals mine at its West Musgrave project.

BHP said on Monday it still hopes a friendly tie-up can be arranged, with its $25a-share bid conditional on OZ Minerals allowing due diligence investigations, and a unanimous recommendation from the OZ board.

Investors piled into OZ Minerals shares, which surged as high as $26.25 before easing to close at $25.59, a 35 per cent gain for the day. OZ Minerals shares were trading as high as $29.75 in January this year, when the copper price was running high, and as low as $15.82 over the past month amid sharp declines on global commodity markets. BHP shares closed up 0.8 per cent at $39.12.

BHP CEO Mike Henry said the $25-a-share offer – a 32 per cent premium to OZ Minerals’ last traded price of $18.92 – offered “compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased ... operational and growth related funding challenges”.

“We are disappointed that the board of OZL 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,” he said.

OZ Minerals boss Andrew Cole said the BHP offer was opportunistic, given recent falls in the copper market, did not “adequately compensate” OZ Minerals shareholders for its operating copper assets, nor for its growth options – including West Musgrave, and its Carrapateena block cave expansion plans.

“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,” OZ Minerals said.