OZ Minerals (OZL) shares surged more than 19% yesterday after a raid on its share register by KKR, one of the world’s biggest private equity companies.
Shares in the copper and gold miner closed at $3.95, up 19.3% after talk of the raid spread and was then confirmed in a substantial shareholding notice to the ASX late testerday afternoon.
KKR picked up a 10% stake in OZ in a raid in Australia and in London overnight Wednesday and Thursday.
OZ noted the speculation, but failed to say anything more in a circumspect statement issued yesterday after the rumours first appeared online.
Steve Okun, KKR Asia Pacific’s director of public affairs told the Australian Financial Review yesterday
"We think that OZ Minerals is a good company that was undervalued in the public markets when we made our investment. We thought it was a good time to accumulate exposure to OZ Minerals shares given the environment. We went out seeking an interest in 10 per cent of the stock at a certain price and were successful in doing so.”
At June 30, OZ held $409 million in cash on its balance sheet, up from $218 million six months at the end of 2014, with no debt.
OZ Minerals share price surge has rubbed off a touch on peers. Sandfire Resources, a copper and gold producer shares jumped 7.6%, while Independence Group, a gold and nickel miner, was up 8%. Shares of other miners such as Regis and North Star failed to get any boost.
OZL 1Y – KKR swoops in on Oz Minerals
The market activity helped boost the overall market which closed up 1.8% in another day of strong trading.
The raid was an odd one for a private equity firm which likes to lob an indicative offer and then try to build that into a firm deal.
But there have been occasions where raids have been staged to draw attention of the target’s board and management.
The drawback is if a deal doesn’t eventuate, the share price of the target company will fall sharply and the raider’s shareholding could end up being sold for a loss.
