Remember how National Australia Bank tried to do a sharemarket raid on AMP in 2003 and managed to botch it completely. Well, BHP-Billiton joined that club overnight after appointing Deutsche Bank to snap up a 10 per cent stake in WMC Resources at $7.85.
At 8.30am this morning the ASX released the overnight statement from BHP that it had appointed Deutsche to look at buying a WMC stake and then 13 minutes later we got a three paragraph effort. Check out the odd sequence of announcements from BHP here.
Clearly there weren’t many takers as the second three paragraph statement included the line that “a decision was made not to acquire shares”.
But the next sentence revealed that BHP-Billiton had already acquired 50.6 shares (4.3%) of WMC through sneaky derivative trading in an earlier move. And the final sentence said BHP-Billiton wanted to acquire all of WMC in a cash bid, but they will only start the process of talking to the WMC board about this today.
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So, after almost five months of horsing around, it’s game on folks as the world’s biggest miner tries to get even bigger by launching the biggest cash takeover in Australian history.
This will pit Melbourne-based BHP against Zug-based Xstrata, which is run by the former Billiton and BHP-Billiton heavy Mick Davis, the man who BHP said helped justify paying such a big price for Billiton in the over-priced merger deal of 2001.
WMC shares have been suspended today so there is clearly an expectation that an agree bid might be agreed sooner rather than later. Just how big a break-fee will BHP-Billiton extract from the WMC board if Xstrata come back with a higher offer. All sorts of records are set to be broken over the coming weeks, including the vexing question of BHP Billiton’s dominance of far too many key global commodities.
Whilst already having huge influence in the likes of aluminium, iron ore, coal and copper, a successful WMC takeover would make BHP-Billiton a dominant player in nickel and uranium as well. Is this healthy. Probably not, but don’t expect the market power argument to get a run in the face of patriotic fervour surrounding our Aussie white knight fending off the dodgy Swiss raiders.