BHP Billiton tipped to launch $35 Billion Dollar takeover bid for Woodside after shares dive

Woodside CEO Peter Coleman has cleared the deck by revealing cost blowouts at the Pluto project. Photo by: Nirme Marie

BHP Billiton may be preparing to launch a $35 billion takeover bid for Woodside Petroleum after shares in the Perth-based explorer closed below $40 for the first time in 10 months, as investors continued to react to last week's shock cost blowouts at the Pluto LNG project.

Sources close to BHP have suggested that the world's biggest miner had effectively ruled out a takeover bid for Woodside while the share price remained above $40, reported The Australian.

BHP told the ASX in April that it was unaware of any reason for market speculation that it would bid for Woodside, although West Australian Premier Colin Barnett revealed the company had sounded him out on a potential bid late last year.

Frenzied speculation about a deal in April pushed Woodside's shares above $48, leading BHP to put the planned takeover on the backburner.

But analysts at Credit Suisse said yesterday that Woodside's plummeting share price -- it has now fallen by almost 15 per cent this month -- could be the catalyst for BHP to swoop on Royal Dutch Shell's unwanted 24 per cent stake in Woodside as a precursor to a takeover.

The shares fell a further 2.2 per cent to close at $39.91 yesterday -- their lowest point since August last year -- after ratings agency Moody's put Woodside on review for a possible rating downgrade.

The stock fell 3.8 per cent on Friday after Woodside's new chief executive, Peter Coleman, revealed that the cost of the flagship Pluto LNG project in WA had blown out by another $900 million to $14.9 billion and been delayed by a further six months.

The announcement came just three weeks after then chief executive Don Voelte said Pluto was 97 per cent complete and would be built for $14 billion.

In a research note yesterday, Credit Suisse noted BHP had a lack of petroleum growth projects in its portfolio and suggested Woodside would provide it with a platform to become a major player in Asian LNG supply for the next three decades.

The bank said BHP may consider a tilt at Woodside especially if the Perth-based group was able to approve an expansion of the Pluto project by signing up third-party gas reserves. "We see the critical issue as being one of price," Credit Suisse said.

"On a risk-adjusted basis WPL (Woodside) may have been too expensive for BHP (once a takeover premium is included), but if WPL's share price stays in the low 40s BHP's interest in WPL may be renewed, particularly if Pluto 2 is de-risked."

Source:

http://www.news.com.au/business/bhp-tipped-to-make-a-move-on-woodside-after-shares-dive/story-e6frfm1i-1226078956812