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Miner BHP Group Ltd on Monday said it offered to buy Oz Minerals Ltd late last week, but the Oz board rejected its approach.
Oz Minerals is a gold, copper and nickel miner. It owns and operates the Prominent Hill and Carrapateena mines in South Australia. It also has an interest in the Pedra Branca copper-gold mine in Brazil.
BHP said that it offered A$25.00 per share in cash for Sydney-listed Oz, 32% above its close on Friday of A$18.92. On Monday, the stock ended up 35% at A$25.59, giving Oz a market capitalisation of A$8.57 billion, about £4.93 billion.
BHP shares closed up 0.8% at A$39.12 in Sydney on Monday, for a market cap of A$198.04 billion. The stock was down 0.5% at 2,235.00 pence early in London and down 2.1% at R 448.97 in Johannesburg.
The offer on Friday requires unanimous recommendation by the Oz board, according to the conditions set by BHP, but BHP said the Oz board refused to engage with it.
‘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,’ said BHP Chief Executive Officer Mike Henry.
‘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.’
In response, Oz said the offer from BHP ‘significantly undervalues’ the company and ‘does not adequately compensate shareholders’ for the company's growth prospects.
‘We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations, said Oz CEO Andrew Cole. ’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.’
BHP noted the price it offered was ‘materially above the average broker price targets’ for Oz shares.
The offer ‘would deliver immediate value to OZL shareholders and de-risk any value which may (or may not) eventually be reflected in OZL's share price’, it said.
Oz said BHP has advised it that has accumulated an equity interest of less than 5% in Oz.
BHP recently refocused its business entirely on mining, hiving off its petroleum business to Perth, Australia-based oil and gas firm Woodside Energy Group Ltd.
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