OZ Minerals has copper mines near BHP's giant Olympic Dam mine in South Australia and nickel assets near BHP's in Western Australia.
Aside from giving BHP more exposure to these two commodities, both deposits would give BHP's own operations the benefit of scale and reduce production costs.
In particular, OZ Minerals' Prominent Hill copper mine is only 130mk from Olympic Dam and there would be immediate synergies in processing the ore and making copper concentrate. The two projects would share an energy grid and staff, and the higher combined volumes would bring down production costs.
OZ Minerals has thus far rejected the BHP bid and refused to engage by opening up its books for due diligence.
The logic for the BHP takeover is compelling, to the point where it's expected to pay more.
It has swooped on OZ Minerals at an opportunistic moment. OZ Minerals has cut is copper production because of operational difficulties and Covid absenteeism. At the same, time, costs are higher because of lower volumes, inflation and staff shortages.
Add the fact that copper prices are sitting at around a one-and-a-half year low because of concerns about the global economy. (Copper is often seen as a proxy for economic growth) and OZ Minerals is under pressure.
Only seven months ago, the company's share price was nudging A$30 a share – a long way above BHP's A$25 takeover offer.
But how much more will BHP pay?
An A$8.3b takeover for a company like BHP, with its market capitalisation approaching A$200 million, could be described as a mere morsel. In the past that's probably how the miner's management would have thought about it, when the firm had an abysmal track record of overpaying for acquisitions that didn't come anywhere near repaying their cost.
Canadian-born Henry was appointed to the top job at BHP in 2020 in part because he promised capital discipline.
And he's living up to that promise. Last year, the miner walked away from a bidding war for Canadian nickel mine developer Noront Resources, leaving the prize for billionaire Andrew Forrest, the owner of Fortescue Metals Group.
BHP isn't likely to do anything until after August 29, when OZ Minerals reports its earnings.
This will provide BHP – and OZ Minerals – shareholders with greater insight into how the smaller miner is performing.
If the result is weak and we see more production declines and cost rises, BHP might add to the 5 per cent stake it already has in OZ Minerals and sit tight.
Under this scenario, OZ Minerals shareholders might also decide that $25 doesn't look too bad after all. They might also remember the price is more than 40 per cent higher than the average OZ Minerals share price over the past month.
Alternatively, if things are turning around, BHP might be tempted to increase its bid.
But it's unlikely to do so by much and risk overpaying.
Future brighter for Telstra?
Shareholders in Telstra learned last week that their final dividend would rise from 8c a share to 8.5c.
While it's true that none of them will be rushing out to buy a superyacht on the back of the extra half-a-cent, the news is significant.
It means the board is confident earnings will grow now Telstra has digested the earnings hit resulting from the loss of its fixed line telephone business. The Australian Government forced Telstra to give up its fixed-line telephone network – including the copper wires leading to homes and businesses – and turned it into the National Broadband Network, a wholesale broadband provider, much like New Zealand's Vocus.
The loss of the business represents a hit on operating earnings of A$3.6b per annum. Outgoing chief executive Andy Penn said this was "a large and difficult pill to swallow, but we have swallowed it".
In 2018, he announced the T22 plan, to simplify our operations, slash the number of products and reduce costs.
These are types of the transformation strategies CEOs of struggling companies announce all the time. But, unlike many, Penn has actually carried out his plan.
On Thursday, he announced he had cut the number of consumer and small business product plans from 1800 to just 20; shifted three-quarters of all service interactions with consumer and small business customers to digital channels; and slashed costs by A$2.7b.
Telstra shareholders will be hoping the dividend rise is the first of many.