(Repeats story issued on Tuesday)
* Oz Minerals rejected BHP's $5.8 billion buyout offer
* BHP needs to sweeten offer to over A$30/share- analysts
* BHP likely to maintain discipline and not overpay -
SYDNEY/LONDON, Aug 9 (Reuters) - BHP must shell out more if
it wants to snap up assets like those of OZ Minerals - a play on
the future of electrification and decarbonisation, analysts and
bankers said, after the miner's unsolicited bid for the nickel
and copper company was rebuffed.
BHP Group's A$8.34 billion ($5.8 billion),
or A$25 per share, bid for OZ Minerals does not fully
value its assets in light of the global green energy push,
according to some analysts.
This is the second rejection that BHP has faced in less than
a year, after it backed off from an offer for Canada's nickel
miner Noront Resources Ltd, making its return to M&A
bumpier than it would have wanted.
While BHP has not said if it would sweeten its OZ bid,
analysts and bankers think if it did it faces no guarantee of
winning over OZ's board as other large miners and metals firms
are sitting in the wings flush with cash and confident in the
long-term outlook for metals like copper - used in wind
turbines, solar power systems and electric cables.
"The underlying belief in this longer-term outlook for
copper will make it very hard to transact without paying a
substantial premium," said Tyler Broda, an analyst at RBC
"This appears to remain the case even with falling near-term
commodity prices and a very uncertain macro environment
impacting both the West and China," he added.
OZ turned away BHP's offer, which was 32% more than the
closing price of its shares on Friday last week, saying it was
"opportunistic" as copper prices had dropped off peaks.
Jefferies estimates OZ could fetch as much as A$36 per share
if a bidder values copper at $4 per pound and offers a 30%
premium. The metal is currently around $3.50, while OZ
shares are at A$25.66.
Prices of copper and other metals have retreated this year
on weak demand from top consumer China, where a zero-COVID
policy has curtailed activity, and a global economic slowdown
amid rising interest rates.
Long-term prospects, however, stay healthy for commodities
like nickel and lithium that are used in batteries for electric
vehicles (EVs), uranium that is used to produce nuclear energy,
and copper as the world gears up to decarbonise.
The OZ deal is the second time a takeover bid by BHP has
failed since it simplified its structure over the past year,
unifying its London and Sydney public holdings in a single
Australia listing, to become nimble for potential investments in
"future facing" commodities.
Last year, BHP sought to buy Noront Resources but backed out
after a months-long bidding war as it did not see "adequate
"BHP has the most firepower in the sector and should use
it," RBC Capital's Broda said.
BHP has more than $15 billion in cash and cash equivalent
holdings, recent filings show.
The world's largest miner with $136 billion in market
capitalisation makes the bulk of its money from digging iron
ore, a raw material used in steelmaking, but it is also a top
producer of copper and is looking to plunge into nickel.
The miner said last week it would spend more on nickel
exploration over the next two years. An OZ deal would have given
it access to projects including West Musgrave in Western
Australia, which has nickel-copper deposits.
BHP may make another bid for OZ, a source with direct
knowledge of the matter said on condition of anonymity given the
details were not public yet. The source added that OZ had
received approaches from others but did not disclose names.
Mathew Hodge, director of equity research at Morningstar,
named "Glencore, Anglo American, Teck and other large to mid-cap
companies" as those that could be potentially interested in Oz.
"They all have rivers of money flowing through them so what
are they going to do with it?"
Glencore declined to comment. Anglo American
and Teck Resources could not immediately be
reached for comment.
Most analysts agree a bid for OZ would have to be sweeter.
"It's going to have to be much sweeter," Peter O'Connor,
mining and metals analyst at Shaw and Partners, said.
"We think the price per share will have to be in the range
of lower to mid thirties if BHP wants to get this done."
O'Connor, however, said that BHP was likely to maintain
discipline and not overpay. The miner has in the past upset
investors with a costly push into U.S. shale that led to
billions of dollars in writedowns.
(Reporting by Clara Denina and Praveen Menon; additional
reporting by Scott Murdoch; Editing by Himani Sarkar)