BHP, Perpetual and Potentia all still doing deals despite rocky markets

Despite choppy conditions in the market, there are still some deals being done. Picture: NCA Newswire / Gaye Gerard

Three deals playing out now show suitors are still willing to do deals despite choppy market conditions.

• BHP’s sweetened offer for OZ Minerals – lifted to $28.25 per share or $9.46bn from $25 or $8.4bn – is set to be recommended by the copper miner after BHP has conducted four weeks of exclusive due diligence.

Now some in the industry are turning their attention to the next target.

The $2bn Sandfire Resources, which raised $200m on Friday, is considered the most logical, given its market value is less than the value of its $2.6bn acquisition of the MATSA copper mining operation in Spain last year.

It raised $200m on Friday to strengthen its balance sheet after taking on debt for the acquisition, with shares issued for the entitlement offer at a 10.2 per cent discount to their last close.

Net debt falls from $US458m to $US324m after the offer, taking its gearing to 18 per cent.

Another target is likely to be the $1.2bn copper miner 29Metals, which was floated last year by EMR Capital.

Resources companies will be looking to invest more deeply in copper as they bet on the transition towards clean energy and electric cars. Copper is used in their motors, batteries and charging stations.

The copper price has rallied recently on the opening up of China.

Barrenjoey and Citi have been working for BHP, was while OZ Minerals was advised by Greenhill and Macquarie Capital.

• Meanwhile, all eyes are on Perpetual this week after it last week recut terms for its $2.1bn merger with Pendal.

Pendal shareholders will receive one newly issued share in Perpetual in exchange for seven Pendal ordinary shares and $1.65 cash per Pendal share, valuing the target at $2.1bn on Friday. This compares to the original offer of one share per 7.5 Pendal shares and $1.976 cash per Pendal share.

While the value stays largely the same, Pendal shareholders receive $125m or 16.5 per cent less cash.

Perpetual is subject to a buyout proposal by BPEA EQT and Regal Partners, first for $30 a share then $33 a share, equating to a $1.9bn market value.

To extract itself from the Pendal merger, Perpetual must pay a $23m break fee, plus other potential costs from court orders sought by Pendal.

Whether there’s a higher offer may depend on which party carries what part of the costs.

DataRoom understands that the initial $30 per share or $1.7bn offer saw BPEA EQT put a price of about $1.45bn on Perpetual’s corporate trust and private clients business, excluding debt, with Regal taking the asset management operation for $250m excluding debt.

In a sweetened offer, the question is whether both would lift their price. A deal could be out of reach for Regal, which only has a $863m market value.

• Finally, private equity firm Potentia appears not to have given up on its takeover target Nitro Software, despite Kohlberg Kravis Roberts coming forward with a $2 per share or $490m binding bid for the business.

Potentia, which already owns 19.8 per cent, said on Friday it wanted due diligence access to determine whether it could make a matching or higher offer, but this was rejected by Nitro.