MELBOURNE: Global miner BHP Billiton Ltd/Plc announced yesterday an all-cash bid of A$9.2bil for uranium and copper firm WMC Resources Ltd, topping a hostile A$8.2bil offer by Switzerland-based Xstrata Plc.
Analysts said the move by BHP Billiton could draw out a higher offer for WMC, which controls 38% of the worlds known uranium reserves at its Olympic Dam mine in southern Australia and is the worlds fifth largest nickel producer.
Potentially, well be seeing more activity because WMC is a prized asset, which hasnt been managed to its full potential over the last few years, said Paul Xiradis, managing director of fund manager Ausbil Dexia, which has stakes in both WMC and BHP Billiton. Theres a lot of value to be had by an acquirer.
Other potential bidders for WMC could include Rio Tinto Ltd/Plc, uranium producer Cameco Corp and Anglo American Plc.
BHP Billiton, which is seeking to boost its nickel and copper assets and add uranium to its portfolio, said it had offered A$7.85 a share in cash for WMC, valuing the latter at US$7.3bil. It said WMC had recommended the bid in the absence of a higher offer.
Xstrata, which last week put pressure on potential rivals to show their hand by dropping all conditions on its bid, said it would not raise its offer for WMC.
Xstrata confirms it will not be increasing its unconditional offer of A$7 per share due to close on March 24, the copper and coal miner said in a statement.
BHP Billiton chief executive Chip Goodyear said the company's acquisition of WMC would create the worlds second largest copper producer after Chiles state-owned Codelco and third largest nickel producer after Russias NorilskNickel and Canadas Inco Ltd.
The opportunity to acquire tier-one assets in low-risk regions and ideally, geographically suited to the growing Asian market, does not come around very often, he told reporters.
It gives us significant long-term development options; it enables us to benefit from the continued strength in the global commodity markets and it further positions us to take the opportunity to benefit from an extended commodity cycle, he added.
BHP Billiton said it would finance its bid from new and existing debt facilities, adding that the acquisition would boost earnings in fiscal 2006. Reuters