BHP Billiton Ltd (BHP) is in talks to buy Royal Dutch Shell Plc (RDSA)’s stake in Woodside Petroleum Ltd (WPL) and make a full takeover offer worth A$46 billion ($48.6 billion) for Australia’s second-biggest oil and gas producer as commodity prices surge, the Sunday Times reported.
BHP would swap some of Woodside’s best assets, including the Sunrise gas field, in return for Shell’s 24 per cent stake in the company, the UK paper reported, citing unidentified people close to the situation. BHP spokeswoman Amanda Buckley, Woodside spokeswoman Linda Hammer and Shell spokeswoman Claire Wilkinson declined to comment.
Woodside shares have surged 14 per cent from this year’s low on March 15 on speculation about an impending takeover and as a record earthquake in Japan damaged nuclear power plants, forcing utilities to boost imports of liquefied natural gas. BHP and Japan’s Mitsui & Co and Mitsubishi Corp are seen as potential buyers of the Shell stake or the company, Credit Suisse Group AG said in a report on April 7.
“Asian LNG prices are the highest in the world and Australia, being in relatively close proximity to Asia, is well positioned to sell to that market,” said Jason Teh, who helps manage A$3 billion including BHP shares at Investors Mutual Ltd. in Sydney. “It comes down to price, but broadly Woodside would be a good fit.”
Woodside support
The talks have intensified in recent weeks and significant obstacles remain that may cause the transaction to fail, the Sunday Times said.
BHP, the world’s biggest mining company, is concerned about paying too high a price to get the support of Woodside’s management, the Sunday Times reported.
