Investors Doubt BHP Bid For Woodside

Printer Friendly Version

Following comments from Goldman Sachs earlier this week that said it appears doubtful that BHP Billiton, the world's largest mining company, is preparing to acquire Woodside Petroleum, investors are echoing Goldman's sentiments, saying the deal does not make sense in the near-term.

The clue that BHP (BHP) is not preparing to move on Woodside, Australia's second-largest oil and natural gas producer, is that the mining giant has not ceased its off-market share repurchase plan, according to Reuters. BHP did stop buying back shares in the weeks leading up to its bid for rival Rio Tinto (RIO), the world's second largest mining company, several years ago.

Last Friday, Woodside shares jumped after Royal Dutch Shell (RDS-A), Europe's largest oil company, said it was moving forward with its previously announced plan to divest its 24% stake in Woodside. That was followed by big purchases of Australian dollars in the forex market by a U.K. bank, prompting renewed speculation BHP was preparing a bid for Woodside.

Analysts and investors agree that Woodside is now richly valued given the recent run-up in oil prices and that if BHP makes more acquisitions in the near-term, they will be comparable to the company's recent $4.75 billion purchase of shale assets from Chesapeake Energy (CHK), the second-largest U.S. natural gas producer.

Archives:200920102011201220132014