BHP has bid $25 for OZL with a higher bid clearly anticipated with the stock trading 6% above the Big Australian’s first salvo, the question we ask (again) today is where does the best risk/reward lie for an Australian copper play:
- If BHP lifts its bid for OZL there’s probably only 12-15% upside.
- Conversely if they pull their bid the stock could easily fall 20%-25%.
While we believe BHP is likely to lift their bid the risk/reward in terms of pure price is 2:1 against, the question is what chance do we see of BHP pulling their bid compared to raising it closer to $30 – the answer is high but tough to quantify.
MM remains long and bullish OZL
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