It’s about time the ASX and ASIC suspended BHP Billiton and Woodside Petroleum for a cooling off period because the market is being fed contradictory information about just what is happening.
Investors are ignoring a statement from BHP yesterday that contradicts earlier reports that it is shaping up for a tilt at Woodside.
BHP denied the speculation of a deal and or a bid involving Shell, but the Western Australian premier Colin Barnett seemingly confirmed that there had been talks.
Woodside shares ended the day up 1.7%, or 90c, at $48.16 after jumping as much as 7.6%, or $3.59, to $50.85 in early trading.
While high, that’s a long way from the $70 a share region the stock hit during the dying days of the last oil price boom in mid-2008.
BHP shares ended up $1.79, or 3.7%, at $49.55 despite the company putting out a statement denying the speculation.
That sharp rise yesterday was partly driven by the Woodside news and a $6 billion buyback ending which meant a lot of big accepting shareholders were buying shares to replace the ones that had been sent to BHP.
BHP and Woodside shares actually rose after the BHP statement was issued just after midday, so much for statements to the market denying the speculation.
In its statement, BHP said, "We refer to discussions with ASX this morning about speculation in the media in relation to Woodside.
"Ordinarily BHP Billiton does not comment on market speculation. However, BHP Billiton advises that the market is currently fully informed of all material information and is not aware of any basis for the market speculation. Consistent with completion of its off-market buy-back announced this morning, BHP Billiton has not been relying on the confidentiality exception in ASX Listing Rule 3.1A."
BHP earlier yesterday announced that it had completed the $6 billion share buyback.
Complicating matters was West Australian premier Colin Barnett who yesterday confirmed the speculation of a move on Woodside Petroleum Ltd by BHP.
Both comments can’t be true at the moment, can they?
So the situations needs a regulator to get the Premier and BHP to clarify what they do and don’t know. But the chances of that happening are remote.
The latest speculation was sparked by a report in the London Sunday Times, that BHP will acquire the 24% in Woodside held by Royal Dutch Shell and then launch a full bid.
Investors yesterday ignored a statement on Sunday from Shell’s Australian head, Anne Pickard, that seemed to rule out any talks or a deal.
In November, Shell sold down about a third of its holding in Woodside in an underwriting agreement with investment bank UBS, reducing its stake in Woodside to 24% from 34%.
According to media reports, Mr Barnett told the Australian Petroleum Production & Exploration Association’s (APPEA) annual conference in Perth yesterday that he was directly aware of a move by BHP Billiton on Woodside.
"I’m aware that there have been discussions of that in the media and I’m also directly aware of those (discussions)," he told reporters at the event.
He said he didn’t object to BHP Billiton taking the 34% stake in Woodside but was strongly opposed to a takeover of the energy giant.
"I don’t care what happens to the 34 per cent particularly, but I urge you ‘hands off Woodside’."
And Woodside CEO Don Voelte told reporters yesterday that there was nothing doing.
"There’s so much speculation out there that you wouldn’t expect me to say anything other than the following: Woodside does not respond to market or media speculation on these type of things," Woodside chief executive Mr Don Voelte said yesterday.
"With the continuous disclosure laws in Australia, we can’t hide this stuff. We can’t not talk about it.
"I mean, a serious proposal that would ever come in on Woodside, we would have to take it immediately to the marketplace," Mr Voelte said in an AAP report.
In the earlier notice about the completion of the $6 billion off-market share buy-back, BHP said it had bought back 147 million shares, representing 4.4% of the issued share capital of the company.
The final price for the buy-back was set at $A40.85 per share, representing a discount of 14% to the market price of $A47.4985 per share, the volume weighted average price for the five days up to April 8.
Yesterday’s share price around $9 above that price shows what can happen in a fast moving highly charged market when there’s a buyback underway.
That’s a big loss of value for a lot of shareholders, regardless of the tax advantages.
If BHP does do a deal over Woodside, it should watch out for possible legal action over the forgone $9 a share.
Some shareholders might argue that BHP should not have run the buyback.
For those shareholders who resisted the buyback, the profits accrue.
