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Berenberg thinks that the price tag BHP Group Ltd is willing to pay to acquire Oz Minerals Ltd is ‘fair’.
Berenberg’s price target for BHP is 2,300 pence. It has a ‘Hold’ on the mining group.
Shares in BHP were down 0.8% at 2,564.50p in London on Thursday. They lost 1.8% to R 530.37 in Johannesburg. In Sydney, the stock closed 0.2% lower at A$46.25 on Thursday.
Oz ended 0.1% stronger at A$27.80 in Sydney.
BHP last month sweetened its offer to A$28.25 per share, valuing Sydney-listed Oz at A$9.6 billion. This represented a premium of 49% to Oz’s closing price of A$18.92 per share on August 5, when BHP tabled its initial A$25.00 offer.
The Melbourne-based diversified miner said on Thursday it entered into a scheme implementation deed with Oz Minerals, as BHP moved a step closer to conclude the acquisition of Oz.
The scheme implementation deed lays out terms and conditions of the acquisition and its non-binding indicative proposal announced on November 18.
BHP said the conditions of the scheme are required to be satisfied by August 31, 2023, unless extended by it and Oz. The transaction is subject to regulatory and shareholder approvals.
The execution of the scheme implementation deed follows the completion of a four-week exclusive due diligence period this month, BHP said.
BHP said Oz shareholders will vote on the takeover offer late in March or early April. If approved by Oz shareholders and the Australian court, the scheme will be implemented shortly after.
The Melbourne-based diversified miner said the Oz board unanimously recommended that Oz shareholders vote in favour of the scheme, and each Oz director intends to vote their shares in favour of the scheme, in the absence of a superior proposal and subject to an independent expert report.
Berenberg said the BHP and Oz news of a formal scheme was unlikely to surprise the market, indicating it supported the deal and noting that it made sense from a strategic perspective.
The investment bank increased its forecast BHP copper production by 11% over 2023 to 2030, while for nickel its 2023 to 2030 production increased by 19% to 110,000 tonnes per year.
Its 2023 to 2030 earnings per share projection increased by 9%.
The inclusion of the Oz assets, Berenberg said, aligned with BHP’s strategy to secure ‘districts’.
‘We think that the price for the deal is fair; when we previously wrote on the deal we thought the bid price might creep into the low A$30s per share, and would expect the deal to progress,’ Berenberg said.
By Artwell Dlamini, Alliance News reporter
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