The OZ Minerals Limited (ASX: OZL) share price is racing higher on Friday.
In morning trade, the copper miner's shares are up 4% to $27.40.
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Why is the OZ Minerals share price racing higher?
Investors have been bidding the OZ Minerals share price higher today after the company accepted a takeover offer from BHP Group Ltd (ASX: BHP).
After rejecting a $25.00 per share offer back in August, the OZ Minerals board has given the thumbs up to a non-binding $28.25 cash per share offer from the Big Australian.
This "best and final" offer represents a 49.3% premium to where OZ Mineral's shares were trading prior to the initial proposal.
The OZ Minerals board revealed that it has granted BHP due diligence access and intends to unanimously recommend the proposal to shareholders. The latter is subject to the offer becoming binding, no superior proposal being tabled, and the independent expert's report.
Why did OZ Minerals accept this offer?
The OZ Minerals board unanimously determined that the previous proposal significantly undervalued OZ Minerals. However, the company's chair, Rebecca McGrath, notes that the billion dollars-plus increase in BHP's offer has changed this. She said:
The Revised Proposal from BHP follows a period of Board-level engagement, securing a circa $1.1 billion increase to the Initial Proposal. It is the Board's view that progressing the Revised Proposal, including providing BHP with access to due diligence, is in the best interests of OZ Minerals' shareholders and other stakeholders. The Board will continue to update shareholders as appropriate.
Why is BHP acquiring OZ Minerals?
BHP sees OZ Minerals as a great way to increase its exposure to future facing commodities. It also believe the combination of their operations will unlock value.
The mining giant's CEO, Mike Henry, commented:
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.
