REG - BHP Group Limited - OZL Board Intends to Recommend BHP's Proposal

BHPAnnouncement

18/11/2022 07:00

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RNS Number : 8374G  BHP Group Limited  18 November 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

NEWS RELEASE

 Release Time    IMMEDIATE
 Date            18 November 2022
 Release Number  38/22

OZ MINERALS BOARD INTENDS TO RECOMMEND BHP'S REVISED PROPOSAL

BHP has submitted a revised non-binding indicative proposal to the Board of OZ
Minerals Limited (OZL) to acquire 100% of OZL by way of a scheme of
arrangement for a cash price of A$28.25 per OZL share (the Revised Proposal).
This offer price represents the best and final price BHP is willing to offer
under the Revised Proposal, in the absence of a competing proposal.

 

The OZL Board has confirmed to BHP that it intends to unanimously recommend
the Revised Proposal to OZL shareholders as being in the best interests of OZL
shareholders in the absence of a superior proposal subject to the parties
entering into a binding scheme implementation agreement (SIA) following
completion of BHP's confirmatory due diligence and an independent expert
concluding that the Revised Proposal is in the best interests of OZL
shareholders.

 

The Revised Proposal price of A$28.25 per share corresponds to an enterprise
value of A$9.6 billion(1) for OZL and represents a significant and attractive
premium of:

•     49.3% to OZL's closing price of A$18.92 per share on 5 August 2022,
being the last trading day prior to the initial proposal by BHP;

•     59.8% to OZL's 30-day VWAP of A$17.67 per share up to and including
5 August; and

•     a 13.0% increase to BHP's original offer price of A$25.00 per share.

 

OZL may pay a franked dividend to OZL shareholders prior to the transaction
being implemented. The cash consideration price under the Revised Proposal
will be reduced by the cash component of any dividends or return of capital
paid by OZL before the date of the implementation of the Revised Proposal.

 

BHP has entered into a Confidentiality and Exclusivity Deed with OZL in
relation to the Revised Proposal. Under the Confidentiality and Exclusivity
Deed, OZL has granted BHP 4 weeks to undertake exclusive confirmatory due
diligence and negotiate a binding SIA reflecting the key terms of the Revised
Proposal. The 4 week period is expected to commence on or around Monday 21
November 2022.

 

BHP Chair, Ken MacKenzie said:

"BHP's proposal would provide value to BHP shareholders by increasing exposure
to future facing commodities, attractive synergies and adding to our pipeline
of growth options."

BHP CEO Mike Henry said:

"BHP's proposal represents a highly compelling offer for OZL shareholders,
providing certainty at a time of macroeconomic uncertainty and market
volatility, and increasing risks for the industry.

 

"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."

 

Attractive Strategic Rationale

 

The proposed transaction is expected to deliver significant value creation for
both BHP and OZL shareholders.

 

Benefits to OZL shareholders and other stakeholders include:

 * Significant and attractive premium: OZL shareholders would receive an offer
price significantly above trading levels and average broker price targets,
prior to BHP's initial proposal on 5 August 2022;

 * Value: the Revised Proposal delivers full and fair value at a level that
rewards OZL shareholders for the attractive long term market fundamentals for
copper and nickel, OZL's growth pipeline and the unique synergy value
available to BHP;

 * Cash certainty: the Revised Proposal provides cash certainty at a time of
increased market volatility in the global base metals industry; and

 * Workforce: BHP expects to retain the vast majority of the OZL team who would
become part of a much larger organisation with access to industry-leading
employee benefits including training programs, flexible work options and
career progression opportunities both domestically and internationally across
a suite of commodities.

 

Benefits to BHP shareholders include:

 * Increased exposure to future facing commodities: The acquisition would add
copper and nickel resources that are essential to support the global
megatrends of decarbonisation and electrification. This is consistent with
BHP's strategy to deliver long term value and returns through owning a
portfolio of world class assets with exposure to highly attractive commodities
that benefit from global mega-trends.

 * Attractive synergies: Creation of a South Australian copper basin which could
unlock potential operational synergies due to the proximity of OZL's
Carrapateena and Prominent Hill operations with BHP's existing Olympic Dam
asset and Oak Dam development resource.

 * Growth options: OZL brings attractive brownfield copper expansion projects at
Prominent Hill and Carrapateena in South Australia. The West Musgrave project
will add a large greenfield nickel option to BHP's Nickel West premier nickel
sulphide resource position in Western Australia.

Conditions to the Revised Proposal

 

The Revised Proposal is subject to certain conditions including completion of
due diligence to the satisfaction of BHP, entry into an SIA, and a unanimous
recommendation from the OZL Board that shareholders vote in favour of the
Revised Proposal in the absence of a superior proposal and an independent
expert concluding that the Revised Proposal is in the best interests of OZL
shareholders. If the conditions are satisfied and the Revised Proposal
proceeds, completion of the transaction will also be subject to conditions
expected to include receipt of approvals from regulators in relevant
jurisdictions, OZL shareholder approval, Australian court approval of the
scheme of arrangement, no material adverse change in relation to OZL, no
prescribed occurrences and other conditions customary for a transaction of
this nature.

 

There is no guarantee that any transaction will eventuate or proceed at this
stage. BHP will continue to focus on its pipeline of organic development
opportunities and demonstrate a capital disciplined approach in relation to
acquisition opportunities.

 

BHP will continue to update the market on the Revised Proposal in accordance
with its continuous disclosure obligations.

 

About OZL

 

OZL is an Australian based mining and exploration company with a portfolio of
operating and development stage projects. OZL's primary activities in
Australia consist of the operating Prominent Hill and Carrapateena underground
copper-gold mines in South Australia, and the West Musgrave copper-nickel
development project in Western Australia. OZL also operates the Carajás East
copper-gold hub in the Para state of Brazil and exploration activities both in
Australia and internationally.

 

Additional information about OZL, including its ASX filings, are available in
electronic form from its website (www.ozminerals.com).

(

1) Based on OZL's fully diluted shares on issue of 336.8 million (inclusive
of 2.1 million performance rights) and net debt of A$84 million as at 30
September 2022.

 

 

Authorised for lodgement by:

Stefanie Wilkinson

Group Company Secretary

 

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Disclaimer and important notice

Forward-looking statements

This announcement may contain forward-looking statements, including statements
regarding the Revised Proposal and related transactions, such as the expected
timing and benefits. Words such as 'anticipate', 'believe', 'aim', 'estimate',
'expect', 'intend', 'may', 'target', 'plan', 'forecast', 'project',
'schedule', 'will', 'should', 'seek' and other similar words or expressions
identify forward-looking statements. Forward-looking statements are based on
assumptions and contingencies that are subject to change without notice and
involve known and unknown risks, uncertainties and other factors, including
those associated with the industries in which BHP and OZL operate.  Many of
these risks are beyond the control of BHP and its related bodies corporate and
affiliates, and each of their respective directors, officers, employees,
partners, consultants, contractors, agents, advisers and representatives. It
is believed that the expectations reflected in forward-looking statements are
reasonable, but they may be affected by a range of variables which could cause
results, performance or achievements to be materially different from the
results, performance or achievements that are or may be expressed or implied
by those forward-looking statements or any projections or assumptions on which
those statements are based.

Factors that could cause actual results or performance to differ materially
from those expressed or implied in the forward-looking statements include, but
are not limited to: price fluctuations, actual demand, currency fluctuations,
geotechnical factors, drilling and production results, development progress,
operating results, engineering estimates, reserve estimates, loss of market,
industry competition, environmental risks, physical risks, legislative, fiscal
and regulatory developments, economic and financial markets, conditions in
various countries, approvals and cost estimates. Except as required by
applicable regulations or law, BHP assumes no obligation, and does not
undertake, to update any forward-looking statements or information regularly
in part or whole.

Investors are strongly cautioned not to place undue reliance on
forward-looking statements, particularly in light of the current economic
climate. Forward-looking statements are provided as a general guide only and
should not be relied on as an indication or guarantee of future performance.
These statements may assume the success of the Revised Proposal, OZL's
operations or BHP's business strategies, the success of which may not be
realised within the period for which the forward-looking statements may have
been prepared, or at all. No guarantee, representation or warranty, express or
implied, is made as to the accuracy, likelihood of achievement or
reasonableness of any forecasts, prospects, returns, statements or tax
treatment in relation to future matters contained in this announcement. To the
maximum extent permitted by law, none of BHP, its directors, employees, agents
or advisers, nor any other person accepts any liability for any loss arising
from the use of this announcement or its contents or otherwise arising in
connection with it.

Limitation of information in relation to OZL

All information in this announcement in relation to OZL has been sourced from
publicly available information in respect of OZL. BHP has conducted public due
diligence in relation to the Revised Proposal, but has not independently
verified such information and, to the maximum extent permitted by law, makes
no representation or warranty, expressed or implied, as to the fairness,
accuracy, correctness, completeness or adequacy of any information relating to
OZL. Receipt of additional or updated information may change any
forward-looking statements concerning OZL in this announcement. OZL may have a
different interpretation of the underlying data and release other information
to the market.

No offer or solicitation

This communication relates to the Revised Proposal between BHP and OZL. This
communication is not intended to and does not constitute an offer to sell or
the solicitation of an offer to subscribe for or buy any securities or a
solicitation of any vote or approval with respect to the Revised Proposal or
otherwise, nor shall there be any offer, solicitation or sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.

The person responsible for arranging the release of this announcement on
behalf of BHP is Stefanie Wilkinson, Group Company Secretary.

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