The BHP stock price (ASX: BHP) surged in the market after the ASX mining giant announced that a higher (and final) bid to acquire OZ Minerals Limited (ASX: OZL) at $28.25 per share was approved by the OZL board.
The progress came after BHP’s last copper bid was rejected due to low valuation.
BHP Dividends Go Up
Compared to the initial offer price of $25 per share, this new one is a 13% increase. It’s a 49.3% increase from the OZL stock’s closing price on August 4, 2022—the day before the initial takeover bid was revealed.
Now BHP will do its homework and try to make a legally binding takeover bid. However, the board of directors of OZ Minerals already gives its green signal that it would almost certainly support the transaction.
BHP stock price is now in focus at $44, up 0.46%, while shares of OZ Minerals are surging 3.99% to $27.35 apiece.
BHP Was Successful in Striking the Deal
The board of directors at OZ Minerals thinks enough of this last offer to endorse it unanimously to shareholders as being in their best interests, so that’s great news for BHP dividends and its shareholders.
Assuming no better offer comes up and when BHP’s confirmatory due diligence is finished, the two parties will enter into a legally binding agreement to put the plan into effect. But there is a twist to it. An outside expert must also determine that the approval is in the shareholders’ best interests.
Compared to OZ Minerals’ closing price on Tuesday, the offer implies a premium of 7.4%; nonetheless, it is a 49.3% increase over the price at which the stock was trading before the original proposal in August.
Before the acquisition is finalised, OZ Minerals may contemplate issuing a franked dividend to its shareholders, as noted in the announcement. However, the cash portion of any dividends or capital return will diminish the cash consideration price.
What benefits does it hold for BHP shareholders?
Three important advantages were highlighted by BHP for its shareholders.
- The acquisition would bring copper and nickel deposits that are “important for decarbonisation and electrification.” BHP’s long-term investment strategy relies on holding a portfolio of world-class assets, including exposure to highly attractive commodities that profit from global megatrends, which in turn would benefit BHP stock price and its shareholders.
- BHP believes that it can achieve synergies that are beneficial to the company. In South Australia, OZL’s Carrapateena and Prominent Hill operations are close to BHP’s existing Olympic Dam asset and Oak Dam development resource, which might lead to operational synergies.
- The mining giant is enthusiastic about the expansion opportunities and its positive effect to BHP stock price. Two of OZL’s brownfield copper expansion projects in South Australia—at Prominent Hill and Carrapateena—are particularly appealing. BHP’s dominant position in Western Australia’s nickel sulphide resource market will be strengthened with the addition of the West Musgrave project, a sizable Greenfield nickel option.
What benefits does it hold for OZL shareholders?
- OZL shareholders will get a premium over trading levels and average broker price estimates before BHP’s first bid on August 5 2022.
- As a result of the excellent long-term market fundamentals for copper and nickel, OZL’s expansion pipeline, and the unique synergy value available to BHP, the Revised Proposal provides full and fair value to OZL shareholders.
- The Revised Proposal delivers cash certainty in a volatile base metals market.
- BHP expects to retain most of the OZL team, which would become part of a much larger organisation with access to industry-leading employee benefits, including training programs, flexible work options, and career progression opportunities domestically and internationally across a suite of commodities.
In the end, BHP offered 49.3% more than OZ Minerals’ closing price on the last trading day before the original offer, August 5, 2022. Hence, holders of BHP stocks expect everything to be good. With a growing portfolio of resource projects centred on copper, nickel, and potash, BHP seems to have a bright future ahead.