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Date : 10/08/2022

BHP Share Price in Focus After Takeover Bid for OZ Minerals

The BHP share price is currently on investors’ radar after the company’s $8.3 billion takeover bid was rejected by OZ Minerals Ltd (ASX: OZL).

BHP Group Ltd (ASX: BHP) is the biggest mining and resource company by market cap globally. The Australian-based mining and resource company is the biggest company listed on ASX regarding market cap. The company intends to secure a robust portfolio in the copper business, so it bids for OZL.

The bid was rejected by OZL, saying the offer undervalues OZL in terms of its potential.

BHP Share Price: Key Financials of the First Half 2022

BHP share price is currently valued at $39.12 and gained slightly after its bid rejection news hit the market. Investors seem to take a huge interest in BHP shares expecting the company might strengthen its position in the copper business in the future.

ASX BHP

  1. First-half sales for 2022 were $30.84 billion. That’s a rise of 27.49 percent year over year.
  2. The net profit after tax recorded by the corporation was $9.44 billion, up 143% year-on-year.
  3. For BHP, the diluted earnings per share came in at $0.93
  4. The company’s nett profit margin was 30.63%.
  5. A total of $12.37 in cash and equivalents was on hand at the end of the first half of fiscal year 22 for the firm.

Details of the BHP’s Proposal:

BHP submitted a non-binding indicative, conditional, and unsolicited proposal on 5 August 2022 to the Board of OZL to acquire all OZL shares at A$25 per share in cash.

The offer represents an attractive premium of 32.1% to OZL’s closing price of A$18.92 per share on 5 August 2022.

BHP has informed the Board that it has accumulated a position in OZ Minerals shares through derivative instruments that amount to less than a 5% interest.

The Indicative Proposal is subject to several conditions, including:

  1. Due diligence in the areas of finance, law, technology, and operations to take place during the course of the planned 6-week period.
  2. Several financial assumptions.
  3. OZ Minerals Board unanimously approves this recommendation.
  4. A plan implementation agreement is subject to no significant adverse change, regulatory, shareholder, and court approvals, and business conduct constraints.

 

How did the BHP and OZL Management React?

OZ Minerals Managing Director and Chief Executive Officer Andrew Cole said:

“We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals in strong demand, particularly for the global electrification and decarbonisation thematic, and we have a long-life Resource and Reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes”.

BHP CEO Mike Henry said:

“Our proposal represents compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZL operational and growth-related funding challenges.

“We are disappointed that the Board of OZL has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal.”

 

OZ Minerals’ Reservations and BHP’s Response After Takeover Bid

The board of OZ Minerals determined that the offer did not fairly reward the company’s shareholders and rejected it.

OZ Minerals said that BHP’s offer undervalued the company because it did not factor in the substantial synergies resulting from the merger.

Copper-focused OZL pointed out that BHP’s entry to acquire OZL coincides with an opportune moment since copper prices and OZ Minerals’ share price had recently dropped.

BHP’s Reply:

The mining giant BHP said that the offer is much higher than the average broker share price target and represents a considerable premium to the company’s market value. This is the predicted value of the company one year from today, as estimated by some brokers.

 

What’s Next for BHP Share Price?

Investors should understand that BHP intends to strengthen its position in the copper sector. The best way to enter this business was to acquire OZL in its dip. OZL shares dropped 34% since the beginning of 2022.

BHP understands that copper will play a vital role in decarbonisation in the future. Investors should connect the dots and realise that BHP is investing in the future.

 

Previous BHP Shares Articles:

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