Wed, 09 Mar 2005


BHP discussing cash offer for WMC Resources

Australian miner WMC Resources confirmed on Tuesday it was in talks with Anglo-Australian BHP Billiton on a possible friendly cash offer for WMC to counter a A$8.2 billion (US$6.5 billion) hostile bid by Swiss-based Xstrata.

WMC Resources Ltd., which is soliciting better offers than the A$7.00 a share bid on the table from Xstrata, is a base metals miner that holds almost 40 percent of the world's known uranium resources at its Olympic Dam mine in South Australia state.

WMC Resources Ltd. said before the start of Tuesday trade that it was in negotiations with Melbourne-based BHP, the world's largest miner, about a friendly cash offer.

The announcement meant trading in WMC was halted until it makes a further announcement, expected on Wednesday.

Analysts say BHP could make a bid of A$8 or more, within the valuation range of A$7.17 to A$8.24 put forward in a report commissioned by WMC and issued in early January.

"BHP Billiton will today seek discussions with the board of WMC Resources regarding the possibility of making an all-cash offer for the entire issued share capital of WMC Resources," BHP said, adding it owns about 4.3 percent of the target company.

It said that Deutsche Bank has been retained as an adviser. The German investment bank was reported by London fund managers overnight on Monday to have been seeking a blocking stake of 10.1 percent in WMC at about A$7.85 a share.

In its brief statement issued from its Australian headquarters, BHP said "a decision was made not to acquire any shares" pending negotiations with WMC on an acceptable sale price.

Xstrata's bid is set to close March 24, and the London-listed company has said it won't increase its offer unless a superior bid emerges.

BHP or global mining rival Rio Tinto PLC had been expected to make a counteroffer after the federal government last month gave permission under its foreign ownership regulations for Xstrata to buy WMC.

WMC spokesman Troy Hey said on Tuesday his company was not yet commenting on any takeover talks. -- AP