BHP signs agreement for $6.4 billion OZ Minerals takeover

ADELAIDE, Australia — BHP Group Ltd. on Thursday said it has signed an agreement to buy Australian copper miner OZ Minerals Ltd. in what would be its biggest acquisition in more than a decade.

The world’s largest miner by market value said the companies have entered into a scheme implementation deed after BHP
offered to buy OZ Minerals
for 28.25 Australian dollars (US$18.96) a share. The OZ Minerals board has unanimously recommended shareholders vote in favor of the deal.

BHP last month raised its bid for the Adelaide, Australia-based miner after an earlier proposal of A$25.00 a share, submitted in August, was rejected by directors as too low.

The latest offer represents an enterprise value of A$9.6 billion, or roughly US$6.4 billion.

“The OZ Minerals directors formed the view that, on balance, the combination of value and certainty offered by the cash scheme consideration is likely to deliver a superior outcome for OZ Minerals shareholders now compared to what would otherwise be available, on a risk adjusted basis, if OZ Minerals continued to operate as a standalone entity,” said OZ Minerals Chairman Rebecca McGrath.

The agreement follows four weeks of exclusive due diligence. It allows for Oz Minerals to pay a dividend of up to A$1.75 a share on or prior to the deal being completed, to be deducted from the offer price.

BHP predicts that demand for copper, which is an excellent conductor of electricity and has wide-ranging uses including in construction and electronics, will double in the next three decades. OZ Minerals runs two copper-and-gold mining operations in South Australia–where BHP runs the large Olympic Dam copper mine–and another in Brazil.

Electric vehicles use four times as much copper as gasoline-powered cars, says BHP, while wind- and solar-energy production requires more copper, per megawatt hour, than producing electricity from fossil fuels.

Yet the global outlook for copper production is hampered by the declining quality of deposits, water scarcity and a lack of exploration success, it says.

BHP also wants to produce more nickel, which OZ Minerals has in a project it is developing in Western Australia, where BHP already runs nickel mines and processing facilities. The mining giant last year agreed to a nickel-supply deal with Tesla Inc.

“The combination of BHP and OZL’s [Oz Minerals’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,” BHP Chief Executive Mike Henry said in a statement on Thursday.

BHP currently relies on iron ore, the main ingredient in steel, for the bulk of its earnings. It is also the world’s biggest exporter of steelmaking coal in a joint venture with Japan’s Mitsubishi Corp.
BHP recently bet on the transition to a lower-carbon world by selling its oil-and-gas unit and approving a US$5.7 billion project to mine potash in Canada.

A completed deal would represent BHP’s largest acquisition since 2011 when it bought Petrohawk Energy Corp. for more than US$12 billion. The mining giant said it intends to fund the acquisition from existing cash and a new loan facility.

A meeting of OZ Minerals shareholders is planned for either late March or early April 2023 and, if approved, the takeover will be completed shortly after, the companies said.

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