BHP Group Ltd (ASX: BHP) shares are under the spotlight after the bigger bid for OZ Minerals Limited (ASX: OZL) is acceptable for the board.
BHP’s last bid for the copper bid was rejected because it undervalued the business.
OZ Minerals board intends to accept BHP offer
BHP decided to increase its offer to buy the OZ Minerals business by 13% to $28.25 per share. This offer came after a period of engagement between the two businesses.
The revised proposal allows OZ Minerals to consider paying franked dividends to shareholders before the transaction is implemented, though the cash offer will be reduced by the cash component of any dividends or return of capital.
This new offer is subject to a number of conditions, including BHP completing satisfactory due diligence, entering into an acceptable takeover deal and unanimous recommendation from the OZ Minerals board of directors.
BHP indicated that this offer price represents the best and final price it is willing to offer, in the absence of a competing proposal.
OZ Minerals has granted BHPan opportunity to conduct due diligence for four weeks on an exclusive basis and the board will work cooperatively towards a takeover deal. The board also said that it intends to unanimously recommend the deal, assuming there isn’t a competing bid.
Why does BHP want to buy OZ Minerals?
There are three main reasons that BHP outlined.
The first is that it increases exposure to future-facing commodities. Copper and nickel are “essential” to support the global megatrends of decarbonisation and electrification.
Next, BHP thinks that it can extract attractive synergies. OZ Minerals’ Carrapateena and Prominent Hill operations are close to BHP’s existing Olympics Dam asset and Oak Dam development resource.
Finally, the mining giant likes the growth options, like the copper expansion projects at Prominent Hill and Carrapateena in South Australia. The West Musgrave project will add a “large greenfield nickel option” to BHP’s Nickel West nickel sulphide resource position in Western Australia.
Final thoughts
Hopefully BHP can achieve good returns from this acquisition, this final bid was a 49.3% premium to OZ Minerals’ closing price on 5 August 2022, being the last trading day before the initial offer.
I think that BHP has an attractive future ahead, with its growing portfolio of resource projects focused copper, nickel and potash.
OZ Minerals shareholders can be happy with the good price they’re getting, in my opinion.
If I were a shareholder, I’d be happy to sell now and reinvest the money into other ASX dividend shares.
