OZ Minerals has entered a trading halt amid renewed talks with BHP more than three months after the Big Australian’s $8.4 billion takeover offer.
OZ requested the trading halt on Wednesday “pending an announcement by the company in relation to a potential change of control transaction”.
The new comes after months of back and forth between OZ Minerals and BHP following the latter’s unsolicited $8.4 billion, $25-per-share takeover offer of the Adelaide-based miner in early August.
BHP’s offer was swiftly rejected, with the OZ Minerals board saying it failed to properly value the company’s portfolio of future-facing resources.
After word spread this week that the two miners had held renewed talks that focused on how BHP could improve its offer, OZ Minerals’ request for a trading halt would seem to indicate those discussions have progressed to a point where a major announcement is imminent.
Industry analysts suggest BHP’s bid would need to increase to somewhere in the vicinity of $10 billion to satisfy the OZ board.
“It would have to be closer around that $30 per share to get that conversation and access,” Blackmore Capital chief investment officer Marcus Bogdan said in the Australian Financial Review.
OZ Minerals’ shares closed at $26.30 on Wednesday November 16.
Media reports in September indicated OZ Minerals was looking for $10 billion in any potential takeover. According to “people familiar with the matter”, OZ believed an offer of $30 per share would better reflect the value of the company’s portfolio of future-facing resources, especially copper and nickel.
This week’s renewed talks and trading halt come after months of indications from BHP that it would not return to the negotiating table with a richer offer.
BHP chief executive officer Mike Henry said in late-August that his company considered OZ Minerals “nice to have, but not a must-have”.
“It’s pretty disappointing that the (OZ Minerals) board chose not to engage,” he said during a media briefing following the release of BHP’s 2022 financial report. “But we have lots of levers for growth and M&A (mergers and acquisitions) is just one of those levers.”
Many in the industry considered BHP’s play on OZ Minerals a further sign the mining giant is pushing to secure more future-facing raw materials.
“The deal would fast-track BHP’s desire to get more exposure to the metals needed for decarbonisation and electrification, specifically copper and nickel, after a whirlwind four years under chairman Ken MacKenzie that has seen BHP exit the vast majority of its oil, gas and coal assets,” resource reporters wrote in the Australian Financial Review at the time of the initial offer.
This week’s renewed talks would only seem to confirm that thinking.