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BHP Group Limited (NYSE:BHP) shares are trading lower today. The company and Lundin Mining Corp. (OTC:LUNMF) have agreed to jointly acquire all outstanding shares of Filo Corp. (OTC:FLMMF) for a total consideration of about C$4.1 billion, or C$33.00 per Filo share.
The offer represents a 32.2% premium over Filo Corp.’s 30-day volume-weighted average price on the TSX as of July 11, 2024, the day before transaction rumors surfaced, and a 12.2% premium over the company’s last closing price on July 29, 2024.
BHP’s total cash payment for the proposed transaction is projected to be around $2.1 billion.
As part of the Filo acquisition, BHP and Lundin Mining will also purchase 3.48 million common shares of Filo at C$33.00 per share, totaling C$115 million in gross proceeds. This share placement is intended to provide interim financing to Filo.
Upon completion of the acquisition, BHP and Lundin Mining will each hold a 50% stake in Filo Corp. and the FDS project.
Filo shareholders can elect to receive cash, Lundin Mining shares, or a combination of both. BHP will contribute approximately C$1.908 billion ($1.377 billion) in cash, while Lundin Mining will provide around C$859 million in cash and C$1.289 billion in Lundin Mining shares.
BHP and Lundin Mining will also establish a 50/50 joint venture to manage the FDS and Josemaria projects in the Vicuña district of Argentina and Chile. Lundin Mining owns 100% of the Josemaria project.
Additionally, BHP will buy a 50% stake in the Josemaria project from Lundin Mining for around $690 million, subject to adjustments.
The company anticipates closing the deal in the first quarter of 2025, pending satisfaction of all closing conditions.
Read: Time Runs Out For BHP Deal: $49-Billion Acquisition Of Anglo American Proves Too Complex To Solve
Mike Henry, BHP’s Chief Executive Officer, said, “This transaction aligns with BHP’s strategy to acquire attractive early-stage copper projects and enter into strategic partnerships with parties where complementary skills and experience can deliver long-term economic and social value.”
“The joint venture with Lundin Mining will advance the development of the Vicuña district, which offers the potential to become a major contributor to the economy of Argentina for decades to come. At the same time, by partnering with Lundin Mining, BHP is continuing to invest in the growth of a robust mining sector in Canada.”
Read: BHP To Temporarily Shut Down Western Australia Nickel Operations: Details
This month, BHP reported second-quarter copper production of 504.9 Kt (+6% Y/Y), led by growth at Escondida (+6% Y/Y), Copper South Australia (+17% Y/Y), and Antamina (+5% Y/Y).
Investors can gain exposure to the stock via Exchange Traded Concepts Trust Optica Rare Earths & Critical Materials ETF (NYSE:CRIT) and VanEck Natural Resources ETF (NYSE:HAP).
Also Read: BHP’s Escondida Mine Faces Potential Strike Over Contract Dispute: Report
Price Action: BHP shares are down 2.47% at $53.65 premarket at the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock
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