Why BHP might still have a chance at acquiring OZ Minerals shares

Investors who own OZ Minerals Limited (ASX: OZL) shares may like to know the company is still open to takeover talks after it rejected a recent offer from BHP Group Ltd (ASX: BHP).

Readers may remember that in August, BHP offered $25 per share to buy the entire OZ Minerals business. However, its board unanimously decided that the proposal “significantly undervalues” the company.

At the time, the OZ Minerals managing director and CEO Andrew Cole said that the miner has a unique set of copper and nickel assets, all with “strong long-term growth potential in quality locations”.

Is a takeover still on for OZ Minerals shares?

While there reportedly haven’t been any more talks between OZ Minerals and BHP, according to The Australian sources, management said the company’s leadership team is still happy to talk.

Speaking to The Australian, the OZ Minerals boss Cole said:

We remain open to in-bounds. We always are happy to talk to third parties but for us today we are continuing to invest in the company and create value for our stakeholders.

It’s a very exciting future for us and we’re stepping now into the age of decarbonisation and electrification. So that puts these assets into a very sought after place, if you like. I feel like we’re very lucky to have this portfolio and we’re going to keep investing in it.

The newspaper asked Cole if he expects BHP to come back with a bigger bid. His response was:

We’re expecting companies to be interested in our portfolio. So the best thing we can do is to create value for our stakeholders and if and when people want to come and talk to us, we’re happy to.

Of course, there’s more to a successful takeover than just talks. BHP seemingly needs to come in with a higher bid to buy all of OZ Minerals’ shares — and it’d need to be good enough for OZ Minerals to accept.

New project to drive value?

Last week, the company announced it had made a final investment decision on the West Musgrave project. The plan is that it will be one of the world’s largest, lowest-cost, lowest-emission copper-nickel projects.

The first concentrate is targeted for the second half of 2025, which is aligned with the beginning of the forecast nickel market deficit.

OZ Minerals says that it has the capacity to fully fund West Musgrave with a new $1.2 billion facility supported by banks, subject to final binding agreements. It is also exploring the potential for a strategic partnership with a minority interest.

In the first five years, the average annual production is expected to be around 35,000 tonnes per annum of nickel and 41,000 tonnes per annum of copper.

OZ Minerals share price snapshot

Despite the boost from the takeover offer, OZ Minerals is down around 5% over the past six months.

The post Why BHP might still have a chance at acquiring OZ Minerals shares appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• BHP shares: Boring or beautiful?
• 5 things to watch on the ASX 200 on Monday
• Why Apollo Tourism, OZ Minerals, SSR Mining, and Whitehaven Coal shares are rising
• 2022 hasn’t been kind to BHP shares. Here’s why I’m holding tight
• OZ Minerals share price higher following $1.7 billion thumbs up

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.

from The Motley Fool Australia https://ift.tt/NHRshza