BHP Group Ltd (ASX: BHP) may have failed with its takeover of UK-listed Anglo American (LSE: AAL) last month, but another ASX 200 mining stock has had more luck over there.
After the market close on Thursday, this miner revealed that it has had its takeover offer accepted, making a deal now quite likely.
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Which ASX 200 mining stock is making an acquisition?
The company in question is Deterra Royalties Ltd (ASX: DRR). It is a mining royalties company that prints money without having to lift a shovel. The jewel in its crown at present is BHP's Mining Area C operation.
But it could shortly be adding to this after Trident Royalties (LSE: TRR) recommended Deterra Royalties' 49 pence or 144 million pounds (A$276 million) cash offer.
Trident Royalties is a diversified mining royalty company based in the UK and listed on the London Stock Exchange. It has a portfolio of 21 royalties and royalty-like offtake contracts providing exposure to base, precious, bulk and battery metals. This includes lithium, gold, silver, copper, zinc, mineral sands, and iron ore.
Its directors intend to unanimously recommend that Trident shareholders vote in favour of the takeover offer and have agreed to vote their shares in favour of it. Deterra has also received irrevocable undertakings and a letter of intent to vote in favour of the offer from key shareholders. Combined, they represent approximately 28.7%. of Trident's issued share capital.
The release notes that the transaction will be implemented by way of a UK scheme of arrangement and is subject to Trident shareholder and court approvals, as well as other conditions precedent that are customary for a UK scheme.
The ASX 200 mining stock's managing director, Julian Andrews, commented:
This Transaction is aligned with our growth strategy of building a diversified portfolio of royalties, with, amongst other benefits, leverage to our scalable operating cost structure. It is an opportunity to accelerate the growth of our portfolio through the addition of a high-quality portfolio of 21 royalties and royalty-like instruments, the majority of which are over North American domiciled assets, at an attractive time in the commodities cycle. This portfolio is consistent with our stated investment criteria, providing exposure to commodities within our target of bulk, base and battery metals from mining operations and projects located in primarily stable and established mining jurisdictions.
Dividend policy update
Potentially offsetting some of the good news above is that Deterra Royalties plans to make a major change to its dividend policy.
This change could potentially see the ASX 200 mining stock's dividends become less generous in the coming years.
It currently operates with a dividend payout ratio of 100% of net profit after tax and will maintain this in FY 2024. However, moving forward, it will change to a minimum payout ratio of 50% of net profit after tax.
Andrews commented:
We have a strong history of disciplined capital management, having delivered more than A$480 million of fully franked dividends to shareholders since our listing in late 2020. While consistent with our well established and overarching capital management strategy, today's adjustment to our dividend policy is designed to better align it with Deterra's targeted longer-term balance between capital growth and income returns. Importantly, our discipline to return capital when not required for investment or balance sheet management remains unchanged.
