MELBOURNE (Reuters Breakingviews) – BHP boss Mike Henry’s apparent nonchalance over the purchase of OZ Minerals has always sounded like acting. No sooner had the metal miner rejected its biggest rival’s A$8.3 billion ($5.8 billion) cash overture in August than Henry touted it as a ‘nice to have’ business. , not indispensable”. Yet on Friday, Target revealed that BHP had recently increased its offer by 13% and said it would accept the revised offer in principle.
Henry is now dangling a 49% premium over OZ’s undisturbed stock price. That might appear to jeopardize its reputation for financial discipline, especially since analysts have over the past four months slashed their estimate of the small company’s 2023 EBITDA by 8%, according to Refinitiv.
The new prize, however, still accumulates. Reducing OZ’s annual expenditure by around a third would cover, taxed and capitalized, the A$3.1 billion premium. It might be overkill in this case, as boss Andrew Cole is known for running a lean ship. But BHP’s lower cost of capital will help, and the global energy transition should allow BHP to exploit the target’s rich copper and nickel deposit. Securing the deal could end up being a magical move. (By Anthony Currie)
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