JUST two months ago BHP Billiton used its impressive half-year results to offer shareholders a $10bn (£6.1bn) buyback. Now it seems to be on the acquisition trail again – so no one could blame investors for being a little confused.
BHP’s cash pile has been steadily increasing as recent acquisition attempts failed – despite fees lost on both the Potash bid and the Rio Tinto iron ore joint venture the miner’s reserves have swelled to $15.4bn – and a bid for Woodside is a safer bet for BHP than its recent takeover attempts. With BHP’s focus on mining and metals, an oil and gas purchase would be unlikely to raise competition concerns.
But there are reasons to be sceptical. Previous buybacks have been suspended shortly before a deal announcement, but Friday’s tender went ahead as planned. And in February’s results BHP execs said the company was focusing on pipeline projects to avoid inflated prices. With the rumoured AUD$46bn (£29.6bn) bid at a 23 per cent premium to Woodside’s market cap, tax uncertainty and project costs mean the Anglo-Australian giant is better off looking for cheaper international buys for now.