Anatomy of a takeover

Last year, BHP concluded its $9.6 billion takeover of Australian copper producer OZ Minerals. Former OZ Minerals chair Rebecca McGrath FAICD, who is the chair of Investa Property Group and a director with Macquarie Group and Bank, Melbourne Business School and Djerriwarrh Investments, shares insights from the takeover process and how the process unfolded. She is this week’s guest on the AICD podcast Boardroom Conversations. Listen to the podcast here.

When the offer came during the Covid years from BHP to take over OZ Minerals, the chair and the board were both prepared and ready to negotiate, according to McGrath.

“We had a high degree of awareness in the boardroom that what we had was attractive to quite a few others,” she told Boardroom Conversations.

“We were in a working in a context where mergers and acquisitions were very common in the mining sector. And so we had spent a lot of time working with management on potential buyers of the company. Who might be interested? Why might they be interested? When might they be interested? And we used to reflect on that quite often.”

She had an expectation that BHP would be in contact at some point as a suitor, because there was synergy and “pretty compelling opportunities” between BHP's interests in South Australia in Olympic Dam and OZ Minerals’ South Australian assets.

BHP did make contact. “But we were very well prepared as a result. And the board had worked through a number of scenarios about what would happen, what we would do, what actions we should take straight away, what we should expect. This was the benefit of having some expert advice, as well as the role of management.”

Managing the process took the form of short but frequent discussions. “There were a number of issues or aspects of the offer we’d talk about. Then I'd say: ‘Okay, well let's go away. Everyone think about that and we'll talk again at 2pm. Literally a few hours later, we’d get together at 2pm. On some days we get together again at 6pm.”

Talks were conducted with the board, CEO and management and sometimes with advisers….it was all done on Zoom because it was during Covid largely. We'd have 30 people on a call, but sometimes we'd just be six. And that allowed me to get the directors to talk openly about their concerns or their expectations”.

The result of the process was one that was “a really good outcome for shareholders”, said McGrath.

First board roles

McGrath, who is a past national board member at the AICD and held a number of senior roles with BP, took on her first board roles in her 40s, which she describes as “a pivotal point in my career”.

BP allowed her to join an Australian public company board – OZ Minerals. “They made an exception for me because it was certainly not policy, but that allowed me to do both my executive job and my non-executive role.”

She had held a number of “fairly large” executive roles globally and had “a lot of large industrial P&L experience” plus some corporate experience.

All this “really served well for me”. “So, the combination of my experience -  whilst I hadn't planned it - to lead to a board career.”

She eventually decided to end her executive role and focus on board work.

“I realised fairly quickly that it wasn't a longterm sustainable model to have both roles. I really enjoyed my role with OZ Minerals, and that gave me the confidence to then I think about a year later, to let BP know that I was going to leave. Then I started to work more on building a board career.”

She later joined the boards of CSR, Incitec Pivot and the Goodman Group.

Her skillset is around industrial companies and in those years, there were few women on industrial public company boards. “I was approached by a couple of other industrials in the ASX 100 and quite quickly formed a really nice portfolio.”

“What you’re passionate about and you've got good skills to support are often the areas that you are the most successful.”