7:17 AM, 11 Jun 2009 Alan Kohler Saving face in OZ Recent Kohler Saving face in OZ Jun 11 Pricing out the crisis Jun 11 A green shoot withers Jun 10 Australia's Baltic burden Jun 9 Rio's China crisis Jun 5
TOP News Minmetals ups OZ Minerals offer by 15% as Macquarie Group pulls out 5:58 AM
The Spectators Kohler: Saving face in OZ
OZ Minerals shareholders can thank Business Spectator’s Robert Gottliebsen for pointing out just how low the Minmetals offer for their assets was, and how the board had failed to screw a better price out of the Chinese firm (Pillaging the land of OZ, June 3).
The margin between the value of OZ and the price Minmetals was offering was so wide that other bids had to emerge, and so they did. Now that Minmetals has upped the bid by 15 per cent, the Macquarie proposal has collapsed.
But when OZ Minerals shareholders gather in Melbourne today to vote on the sale of their company, they will know the buyer is still getting a bargain – less of a bargain, to be sure, but a bargain nonetheless.
As soon OZ fell into the hands of its bankers last year because its cash reserves had run out at the wrong time, someone was always going to get this company and/or its assets cheaply.
Either the banks and receivers would feast on a carcass, or the directors would cajole and bully the banks into giving them time to negotiate a deal with corporate buyer.
That’s what happened, and the directors are to be congratulated for pulling that off.
But the deal was just a little too cheap. The independent valuer, Grant Samuel, said the business was worth about 33 per cent more; opposition emerged in the formidable form of R. Gottliebsen Esq, along with two alternative proposals.
The board, perhaps understandably, rejected the alternatives in favour of the certainty of Minmetals, partly because they no longer trusted the banks not to pull the rug out from under them.
Late last night, the gap between price and value was half closed and honour has been preserved.
OZ shareholders will vote in favour of the deal today and China, at last, will get another significant foothold in Australia.
But the big prize – Rio Tinto – has fled into the arms of a rival and “perfidy” is the cry in Beijing, despite the more minor but still juicy morsel of OZ Minerals.
Ab.
OZL Price at posting:
$8.90 Sentiment: LT Buy Disclosure: Held
