Australia’s OZ Minerals backs BHP’s improved $6.4 bln offer


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BHP Group Ltd has been given access to OZ Minerals’ books after it made an improved offer valuing the miner at A$9.60 billion ($6.42 billion), moving a step closer to beefing up its copper and nickel portfolio as demand for the battery metals surge.

The deal comes at a time of strong demand for battery metals amid surging popularity of electric vehicles, and as buyout activity ramps up, emphasized by Rio Tinto’s recent play for Canada’s Turquoise Hill to gain control of its giant copper mine in Mongolia.

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If the deal goes through, it would allow BHP to consolidate its copper position in South Australia, where OZ’s mines Prominent Hill and Carrapateena lie next door to BHP’s Olympic Dam mine and smelting operations.

BHP’s new cash offer of A$28.25 per share is at a 7.4% premium to OZ Minerals’ last close, and 13% higher than the A$25 apiece proposal rejected in early August as “opportunistic” and undervalued.

BHP has called its revised offer its “best and final” in the absence of a competing proposal.

OZ Minerals decided to grant BHP due diligence for four weeks on an exclusive basis, starting Nov. 21.

“The intention of the OZ Minerals board is to unanimously recommend the revised proposal as being in the best interests of OZ Minerals’ shareholders in the absence of a superior proposal,” the copper miner said.

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“BHP’s revised proposal is a clear reflection of OZ Minerals’ unique set of highly strategic, quality assets … growth pipeline of copper and nickel assets in strong demand due to global electrification,” said Andrew Cole, Chief Executive Officer of OZ Minerals.

BHP plans to splash cash on nickel exploration over the next two years and a deal with OZ would give it access to projects, including the West Musgrave copper-nickel operation in Western Australia.

“I don’t think these are the most amazing assets in the world, but there are synergies for BHP, and it’s easier to develop projects in Australia than some other jurisdictions,” said Andy Forster, senior investment officer at Argo Investments.

OZ in September had said it would invest more than $1 billion in West Musgrave, which is expected to produce about 35,000 tonnes of nickel and 41,000 tonnes of copper on average annually in the first five years of production. ($1 = 1.4948 Australian dollars) (Reporting by Sameer Manekar and Shashwat Awasthi in Bengaluru, Additional Reporting by Melanie Burton in Melbourne; Editing by Subhranshu Sahu and Krishna Chandra Eluri)


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