OZ Minerals board intends to recommend BHP’s revised proposal

BHP has filed to the Board of OZ Minerals Limited (OZL) a revised non-binding indicative proposal to acquire 100 per cent of OZL through a scheme of arrangement for a cash price of A$28.25 per OZL share.

In a statement, BHP stated that in the absence of a competing proposal, this offer price represents the best and final price BHP is willing to provide under the Revised Proposal.

In the absence of a superior proposal, the OZL Board has informed BHP that it plans to unanimously recommend the Revised Proposal to OZL shareholders as being in the best interests of OZL shareholders. However, this recommendation is only made if a binding scheme implementation agreement (SIA) is entered into between the parties after BHP has completed its confirmatory due diligence and an independent expert has determined that the Revised Proposal is in the shareholders’ best interests.

With an enterprise value of A$9.6 billion1 for OZL, the Revised Proposal price of A$28.25 per share implies a sizeable and alluring premium of:

• 49.3 per cent to OZL’s closing share price of A$18.92 on August 5, 2022, the final trading day before BHP’s original proposal;
• up to and including 5 August, OZL’s 30-day VWAP was A$17.67 per share, representing a 59.8 per cent increase;
• BHP’s first offer price of A$25.00 per share has been increased by 13.0 per cent.

Prior to the transaction’s implementation, OZL may pay a franked dividend to OZL shareholders. The cash component of any dividends or return of capital paid by OZL before the implementation of the Revised Proposal shall be deducted from the cash consideration price under the Revised Proposal.

Concerning the Revised Proposal, BHP and OZL have agreed to a Confidentiality and Exclusivity Agreement. OZL has authorised BHP four weeks under the Confidentiality and Exclusivity Deed to conduct exclusive confirmatory due diligence and negotiate a binding SIA incorporating the significant features of the Revised Proposal. The four-week period is projected to begin on or around Monday, 21 November 2022.

“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,” BHP Chair Ken MacKenzie said.

BHP CEO Mike Henry stated BHP’s proposal is a highly appealing offer for OZL shareholders, assuring during a period of macroeconomic uncertainty and market volatility, as well as growing risks for the industry.

“The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development,” Henry added.

Conditions to the Revised Proposal

The Revised Proposal is subject to several conditions, such as satisfying BHP’s requirements for due diligence, entering into an SIA, and a unanimous recommendation from the OZL Board that shareholders vote in favour of the Revised Proposal in the absence of a better one and a finding from an independent expert that the Revised Proposal is in the best interests of OZL shareholders. The completion of the transaction will be subject to additional conditions, which are anticipated to include receipt of approvals from regulators in relevant jurisdictions, OZL shareholder approval, Australian court approval of the scheme of the arrangement, no material adverse change in relation to OZL, no prescribed occurrences, and other conditions typical for a transaction of this nature, if the conditions are met and the Revised Proposal proceeds.

BHP will focus on its organic development potential pipeline while maintaining a capital-disciplined approach to acquisition opportunities.

In compliance with its ongoing disclosure responsibilities, BHP will continue to provide market updates on the Revised Proposal.