BHP OZM How Mike Henry’s quest for more green metals led to an $8 billion bid

But one would have to assume that Oz Minerals would very likely have been on BHP’s wish list and preparing its defensive battle plan. BHP had already taken a position in Oz Minerals just below the 5 percent disclosure requirement – although it is not clear when this was acquired or when Oz Minerals became aware of it.

Not surprisingly, Oz Minerals stormed out the gate Monday morning to call BHP’s $25-per-share ($8.3 billion) bid opportunistic.

It’s a fair statement, this offer isn’t particularly generous. As such, Oz Minerals happily dropped any hope from BHP that this would be a friendly offer.

However, opportunism gets a bad rap in the takeover game.

If a bidding company didn’t try to capitalize on everything to minimize the purchase price, they wouldn’t be doing the right thing by their own shareholders.

The art of buying assets is opportunistic timing. And BHP has understandably pounced on Oz Minerals at a time when its prey’s share price is faltering due to weakness in copper prices.

It’s also no coincidence that BHP moved five weeks after Oz Minerals updated the market with disappointing forecasts of lower copper production due to some operational difficulties and COVID absenteeism. Oz also told investors that costs had increased due to lower volume, inflation and labor shortages.

BHP tries to exploit this window.

For its part, Oz Minerals, which has flatly rejected the $25 price that BHP has put on the table, will argue that the offer is idiotic from a longer-term perspective. Just seven months ago, Oz Minerals was close to the $30 mark.

The copper price is widely viewed as an indicator of the global economy, which is currently under fire amid actions taken by the world’s central banks to curb inflation.

Oz Minerals would prefer its investors to focus on longer-term structural demand for copper and nickel in a decarbonized world.

While BHP’s offer feels like an inaugural offer and that there’s more to come, a deal isn’t guaranteed.

BHP has offered an amount that represents a 32 percent premium to Oz Minerals’ previous closing price – which is on the meager end of the generous – and not enough to warrant due diligence.

Oz Minerals won’t give a hint how much more it would do to reverse that stance and agree to flat-out negotiations.

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What matters to Mike Henry is his commitment to a disciplined capital framework and his assessment of other opportunities to expand BHP’s portfolio of future-oriented commodities.

The market got a little taste of Henry’s discipline late last year when he battled Andrew Forrest for potential Canadian nickel explorer Noront. BHP eventually dropped out of the race.

Oz Minerals believes its bargaining power comes from being the most attractive dance partner. It has high-quality, durable assets in Australia, a market BHP knows well and where sovereign risk is lower than other copper- and nickel-rich parts of the world.

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