Australian OZ Minerals Rejects $5.8 Billion BHP Offer, Says It’s Undervalued

By: MRT Finance

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Australia’s OZ Minerals rejected an unsolicited 8.34 billion Australian dollar (about US$5.76 billion) takeover bid from BHP Group on Monday as the global miner seeks to exploit metals such as nickel and copper to take advantage of the booming demand for electric vehicles.

OZ said the conditional, non-binding indicative offer of A$25 per share, made on Friday and first disclosed on Monday, was “highly opportunistic” but significantly undervalued the nickel-copper miner.

The proposal presented a 32% premium to the close of OZ shares on Friday, when it had a market capitalization of 6.37 billion Australian dollars, according to Refinitiv Eikon.

Demand is growing for metals such as nickel and copper, key components in e-vehicle batteries and their parts.

BHP said last week it would increase its spending on nickel exploration over the next two years and a potential deal for Oz would give it access to projects including West Musgrave in Western Australia, which has nickel and copper deposits.

“We are disappointed that OZL’s board has indicated that it is unwilling to consider our offer compelling or provide us with access to due diligence in relation to our proposal,” said BHP Chief Executive Mike Henry.

The company did not say whether it would make a new offer.

OZ, for its part, claimed that BHP’s proposal fell short on several fronts.

“We are extracting minerals that are in solid demand, particularly on the issue of global electrification and decarbonisation… We do not consider that BHP’s proposal sufficiently recognizes these attributes,” said OZ Chief Executive Andrew Cole.

OZ also disclosed that BHP had acquired a less than 5% stake in its shares through derivative instruments.

(1 dollar = 1.4482 Australian dollars)

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