It's the takeover news copper heads have been waiting for as OZ Minerals rejects BHP's $8.4 billion bid

BHP lobs $8.4 billion cash offer in bid to take out copper and gold miner OZ Minerals
OZ board has rejected $25 per share offer, which comes in at a 41.4% premium to its 30-day VWAP but 14.4% below its January share high of $29.21
BHP boss Mike Henry says offer is “compelling”

BHP (ASX:BHP) has called open season in its shift to focus on future facing commodities, following months of speculation, by lobbing a rejected $8.4 billion offer for copper-gold miner OZ Minerals (ASX:OZL).

Word BHP was looking for big new assets in battery metals like copper and nickel has been an open secret in recent months, with market speculation centring on a potential buyout of Vale and Glencore’s base metals assets.

But the world’s biggest miner is starting smaller, issuing a $25 a share bid for OZ Minerals that values the South Australian and Brazilian copper and gold producer at a 41.4% premium to OZL’s 30-day VWAP of A$17.67 per share.

Other copper stocks likely to be poking their heads up as BHP scours the sector for growth in a major ‘energy transition metal’. OZL shares have already bounded past the offer price, rising 33.3% this morning to $25.23.

BHP shares are up 0.49%.

Offer rejected

BHP is hot for copper right now, but OZL views it as an opportunistic raid.

OZ was trading as high as $29.21 a share in January before copper prices dived from upwards of US$10,000/t to US$7871/t today.

OZ, which is on track to produce 120,000-135,000t of copper and 208,000-230,000oz of gold this year from its Prominent Hill and Carrapateena mines, clearly takes the view this is only a blip, rejecting the scheme arrangement BHP threw under the board’s nose on Friday.

“We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand particularly for the global electrification and decarbonisation thematic and we have a long-life Resource and Reserve base,” OZ MD Andrew Cole said.

“We do not consider the proposal from BHP sufficiently recognises these attributes”.

BHP disappointed in rejection

BHP, it seems, thinks copper prices are likely to rise as well. OZ’s assets have potential synergies with its giant Olympic Dam copper-gold-uranium, like Prominent Hill and Carra also in SA’s Gawler Craton.

It would also secure the $1.1 billion West Musgrave nickel-copper development, originally discovered by Western Mining Corporation over 20 years ago and ironically sold by BHP for a pittance in 2014.

CEO Mike Henry said he thought the deal represented a compelling offer in the current macroeconomic environment.

“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,” he said.

“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.”