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BHP Group Ltd said on Friday the board of Oz Minerals Ltd intends to recommend an improved takeover offer that values Oz at A$9.6 billion.
Oz 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, a Melbourne-based diversified miner, said it increased its non-binding indicative offer to A$28.25 per Oz share in cash, representing a premium of 49% to Oz's closing price of A$18.92 per share on August 5, when BHP tabled it initial offer.
Back in August, BHP offered A$25.00 per share in cash for Sydney-listed Oz, but the Oz board rejected it at the time.
On Friday, Oz confirmed that its board intends to unanimously recommend BHP's revised offer to its shareholders. It said the takeover approach was in the best interest of its shareholders in the absence of a superior proposal.
The two companies said on Friday they had entered into a confidentiality and exclusivity deed in relation to the revised proposal. Under this accord, Oz has granted BHP four weeks to undertake exclusive confirmatory due diligence and negotiate a binding agreement.
The four-week period is expected to commence on or around Monday next week.
BHP said its latest Oz offer represented its the ‘best and final’ price it is willing to pay.
Shares in BHP closed up 0.3% at A$43.94 in Sydney on Friday, giving it a market capitalisation of A$222.59 billion, about $149.21 billion.
Oz was up 4.0% to A$27.34 in Australia, giving it a market capitalisation of A$9.15 billion.
BHP said Oz might pay a franked dividend to Oz shareholders before the deal is implemented.
The revised proposal is subject to conditions including completion of due diligence, and shareholder and regulatory approvals.
‘The cash consideration price under the revised proposal will be reduced by the cash component of any dividends or return of capital paid by OZL before the date of the implementation of the revised proposal,’ BHP said.
BHP Chair Ken MacKenzie said: ‘BHP's proposal would provide value to BHP shareholders by increasing exposure to future facing commodities, attractive synergies and adding to our pipeline of growth options.’
Added BHP Chief Executive Mike Henry: ‘BHP's proposal represents a highly compelling offer for OZL shareholders, providing certainty at a time of macroeconomic uncertainty and market volatility, and increasing risks for the industry.’
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