The BHP Group Ltd (ASX: BHP) share price is rising after the ASX mining share revealed that a higher (and final) offer to buy OZ Minerals Limited (ASX: OZL) had been accepted at a price of $28.25 per share.
This higher offer represented a 13% increase to the original offer price of $25 per share. It was a 49.3% premium to the closing price on 5 August 2022, the day before the first takeover bid was announced.
BHP will now carry out due diligence and negotiate a binding takeover offer. But, the OZ Minerals board has already said it is likely to unanimously recommend the deal.
The BHP share price is currently up 0.46% to $44, while the OZ Minerals share price is soaring 3.99% to $27.35.
Benefits of the deal
BHP noted three key benefits for the ASX mining share.
The acquisition will add copper and nickel resources that are âessential to support the global megatrends of decarbonisation and electrification”.
This aligns with BHPâs strategy to âdeliver long-term value and returns through owning a portfolio of world-class assets with exposure to highly attractive commodities that benefit from global mega-trends”.
Another benefit is the âattractive synergiesâ that can be created because some of OZ Mineralsâ projects are close to BHPâs. This can create âoperational synergiesâ.
BHP also pointed to âgrowth optionsâ. The company noted:
OZ Minerals brings attractive brownfield copper expansion projects at Prominent Hill and Carrapateena in South Australia. The West Musgrave project will add a large greenfield nickel option to BHPâs Nickel West premier nickel sulphide resource position in Western Australia.
My opinion on the prospects for the BHP share price
Assuming BHP has made the numbers stack up, it seems like a smart deal to pursue. Copper and nickel are likely to be needed in large quantities in the future as electrification occurs throughout society in vehicles, power distribution, and energy generation.
The BHP share price has been volatile in recent months. Itâs down 6% in the past six months, yet itâs up 11% over the last month.
I think things are looking promising for a number of its commodities.
Iâve already mentioned nickel and copper. Coal continues to generate good earnings for the company. The iron ore price could get a boost if China continues to ease its COVID-19 restrictions and keeps supporting the real estate sector. Potash, a supposedly green form of fertiliser, could be another strong earnings pillar for the business in future years.
In the short term, earnings and the BHP share price will be heavily influenced by which way resource prices are going.
But, I like the moves the business is making, and I think itâs setting up ongoing long-term success in terms of cash flow generation, though volatility should be expected.
According to the estimates on Commsec, BHP is expected to pay a grossed-up dividend yield of 8.6% in FY24 and 10% in FY23 (the current financial year).
I believe the ASX mining share is at good enough value to want to buy shares for the long term.
The post Are BHP shares in the buy zone following the latest OZ Minerals news? appeared first on The Motley Fool Australia.
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More reading
- Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
- Why is the OZ Minerals share price racing higher on Friday?
- OZ Minerals share price on watch after accepting BHP’s $28.25 per share takeover offer
- Is a weak US dollar good for ASX 200 mining shares?
- Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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