The transaction price represents an enterprise value of A$9.6bn ($6.4bn) for OZL, which BHP intends to fund through a combination of its existing cash reserves and cash equivalents, and the proceeds of a new loan facility
Prominent Hill Site at night. (Credit: OZ MINERALS)
Australian mining company BHP has signed a scheme implementation deed (SID) to acquire all the share capital of OZ Minerals Limited (OZL), at a price of A$28.25 ($19) per share.
The SID, signed through its wholly owned subsidiary BHP Lonsdale Investments, follows BHP’s non-binding indicative proposal announced last month.
The transaction price represents an enterprise value of A$9.6bn ($6.4bn) for OZL.
It indicates a 49.3% premium to OZL’s closing price of A$18.92 per share on 5 August 2022, and 59.8% to OZL’s 30-day VWAP of A$17.67 per share on 5 August 2022.
The agreement is subject completion of a four-week exclusive due diligence period.
The Board of Directors of OZL unanimously recommended the shareholders to vote in favour of the scheme, and OZL directors will to vote their shares in favour of the acquisition.
BHP intends to fund the acquisition through a combination of its existing cash reserves and cash equivalents, and the proceeds of a new loan facility.
The total amount of funding available under this facility exceeds the consideration required and all expected costs associated with the Scheme.
BHP CEO Mike Henry said: “The combination of BHP and OZL’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.
“We thank the OZL Board and management for their engagement through the due diligence process and look forward to working together to continue to take steps forward to complete the transaction.”
The implementation of SID is subject to certain conditions including receipt of approvals from regulators in Brazil and Vietnam, OZL shareholder approval, Australian court approval.
It contains certain customary exclusivity provisions including ‘no shop’ and ‘no talk’ restrictions, and a matching right in favour of BHP, for competing proposals.
In addition, the agreement also contains a reciprocal break fee regime of A$95m, which is payable by BHP and OZL in certain circumstances.
Furthermore, the deal enables OZL to pay a franked dividend of up to A$1.75 per share to its shareholders, on or before implementation of the transaction, said BHP.