The likely capitulation of WMC Resources to BHP Billiton this week has drawn a strong bagging from a former leading investment manager, Warren McCullagh, who used to run the old Commonwealth Bank’s super fund and was the doyen at QBE Insurance for many years.

In this inspired letter to The Financial Review today, McCullagh took aim at the company’s board and the so-called experts’ report to claim that they had failed shareholders.

“I am extremely disappointed that the board of WMC has encouraged shareholders to accept an entirely inadequate bid,” he said in the letter. McCullagh said he had followed WMC in its various forms for more than 30 years. And so he did, investing in the company and its various offshoots, such as BH South, WMC itself and was an early investor in Alcoa Australia.

He also took issue with the failure of the board to upgrade its earnings guidance for 2005, which commodity prices suggest should be 20-25% higher than what’s currently on the record.

McCullagh pointed out that press comment was that the $7.85 from BHP Billiton was fair, even a generous price for WMC. “It is neither,” he comments, adding that the company had been an “indifferent” performer but “much operational improvement in this area has been achieved in the past couple of years.”

Then there are some raw numbers which McCullagh put on the table than undermine the arguments of Grant Samuel and the WMC board.

Grant Samuel assumes a nickel price of $5.13 a pound – 22% below the average nickel price for the five years 2000-2004 and half the current spot price of $10 per pound? That’s undercutting the valuation by $2 a share. He finishes with a fine flourish: “Other mid-point price assumptions are also too low – copper should be increased by at least 10% and uranium by at least 20%. Thus a fair mid-point valuation for WMC shares is in excess of $10.50. Grant Samuel and the WMC board have done shareholders a massive disservice.”

No wonder the mood was flat at what might be the last WMC AGM in Melbourne yesterday. And no wonder the likes of Hugh Morgan and Don Morley didn’t turn up. Sir Arvi Parbo cut a lonely figure in the front row, but as a former chairman of both BHP and WMC, he was kind of obliged to fly the flag.