BHPB looks to wrap up WMC

IN the largest cash takeover in Australian corporate history, BHP Billiton has made a successful 11th-hour play for WMC Resources, which built an empire on assets in Western Australia’s Kambalda nickel province. With its bid due to run out of time on June 3, BHP Billiton secured control of WMC with five hours to spare, receiving acceptances for 55.45 per cent of the company, which it valued at $9 billion. (At the time WA Business News went to print BHP Billiton had received acceptances for 77.41 per cent of WMC). The offer has now been automatically extended by two weeks, which BHP Billiton will use to grab as much of the stock as it can in order to reach the crucial 90 per cent mark, at which point compulsory acquisition proceedings can commence. Patersons Securities analyst Alex Passmore said the majority share announcement was expected because a lot of hedge funds and others were required to hold out until they were confident a higher bid would not be made. “Similar to many recent acquisitions, such as Portman, the last day of an offer will often see an avalanche of acceptances,” he said. BHP Billiton will now put into place an expedited acceptance facility, which will attempt to secure the remaining stake in WMC. In addition, BHP will accelerate payment terms so that WMC shareholders who have accepted the offer or lodged instructions will be paid the offer consideration of $7.85 per WMC share within five business days of their acceptance being processed or instructions being implemented. As a result of BHP Billiton becoming the majority shareholder, it will now change the composition of WMC’s board to reflect its holding in the company. While the eventual ownership structure is not yet known, a rival bid is now out of the question, bringing to an end a saga that began in November last year with an unsuccessful bid from Swiss raider Xstrata. It then made another larger, more serious bid, which valued WMC at $5.7 billion, and prompted a national interest debate regarding the suitor’s links to metal trading house Glencore and the implications of uranium falling into the wrong hands. The uranium in question, considered the main prize of WMC, is contained in the Olympic Dam copper-uranium mine in South Australia, the largest deposit of its kind in the world. But that does not mean BHP Billiton will baulk at WMC’s world famous nickel operations in Kambalda, which produced more than 62,000 tonnes of nickel metal last year. A sell-off of exploration ground in the area by WMC last year meant that significant nickel plays have recently been made, most notably the Lanfranchi mine, now producing for Sally Malay Mining. It also coincides with the nickel development boom in WA, most recently encapsulated by a joint venture announcement between Ian Buchhorn’s Heron Resources and Canadian nickel giant Inco to develop the Kalgoorlie laterite nickel project.