OZ Minerals shareholders may warm to scrip option in BHP bid

The danger with a cash deal is that the copper price could rally between the time a deal is agreed and finalised. Picture: Bloomberg

OZ Minerals investors worrying about a big tax bill and missing out on a copper price rally due to a takeover by BHP could be appeased by a deal where they are paid in the mining giant’s shares. The OZ Minerals buyout proposal by BHP that was rejected this month is likely to be a talking point for BHP’s results on Tuesday.

DataRoom understands that a number of OZ Minerals shareholders are keen to receive cash rather than scrip.

But a scrip deal at a higher price could win some over.

The danger with a cash deal is that the copper price could rally between the time a deal is agreed and finalised.

It also leaves OZ Minerals shareholders in a position where they need to pay capital gains tax on their profits if they are offered cash. But any investor paid in BHP shares gets rollover relief.

Market observers say it is unlikely that BHP would want to pay scrip, given that it is cashed up after asset sales, but OZ Minerals shareholders could position the argument where they say if BHP is not prepared to pay scrip, it should then pay a higher price in cash to compensate for the risk factors.

It is understood BHP has been working on a buyout of OZ Minerals since 2020, but had been keen to finalise asset sales in the coal and petroleum space before any deal was done.

BHP offered $25 per share, equating to a market value of about $8.4bn, and experts believe an offer around $30 is needed to gain approval from OZ Minerals.

At the time the bid emerged last week, it was a 32.1 per cent premium to the $18.92 closing price, with the copper price trading at about $US3.50 per pound, falling from its $US4 per pound peak in March. OZ shares closed on Monday at $25.78.

Elsewhere, Amicaa won the beauty parade that was held to find an adviser for the sale of the collapsed gold miner Wiluna Mining, flagged by DataRoom last week.

Amicaa is the advisory firm of the former Bank of America Merrill Lynch Australia investment banking head David Wood. Wiluna Mining has collapsed for the second time – the first when it was known as Apex Minerals – and is now in the hands of voluntary administrator FTI Consulting.