The OZ Minerals share price is rocketing 35% after BHP bid

Despite knocking back a takeover bid, OZ Minerals shares are going nuts.

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Key points

  • BHP has put in a takeover bid for OZ Minerals
  • The offer was for $25 cash per share
  • However, OZ Minerals doesn't think this offer is good enough

The OZ Minerals Limited (ASX: OZL) share price has shot higher to be the best performer in the S&P/ASX 200 Index (ASX: XJO) at the time of writing.

OZ Minerals shares are currently trading for $25.51 each, a 34.83% leap from their previous close of $18.92 a share.

It comes as BHP Group Ltd (ASX: BHP) has offered a takeover bid of $25 cash per OZ Minerals share.

BHP's bid represents a premium of 32.1% compared to the last closing price of OZ Minerals shares last week.

According to OZ Minerals, BHP has accumulated an interest in OZ Minerals through derivative instruments, amounting to a holding of less than 5%.

After considering the offer, the OZ Minerals board decided the offer "significantly undervalues" the company and rejected it.

OZ Minerals pointed out the offer represents a premium of just 13.1% to the volume weighted average price for the last six months.

Management response

OZ Minerals managing director and CEO Andrew Cole said:

We have a unique set of copper and nickel assets, all with strong long-term growth potential in quality locations. We are mining minerals that are in strong demand particularly for the electrification and decarbonisation thematic and we have a long-life resource and reserve base. We do not consider the proposal from BHP sufficiently recognises these attributes.

OZ Minerals pointed out here is a "strong long-term outlook" for both the copper and nickel markets underpinned by increasing geological scarcity, global electrification, and accelerating decarbonisation. It says it's highly leveraged to this and is exploring for more deposits.

OZ Minerals share price snapshot

Since the start of 2022, OZ Minerals shares are still down 9% despite the huge rise today.

The company has a current market capitalisation of approximately $8.5 billion.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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