Bhp, Billiton Merge into New Gaint

By Williams, Stephen | African Business, May 2001 | Go to article overview

Bhp, Billiton Merge into New Gaint


Williams, Stephen, African Business


The proposed merger between BHP and Billiton, announced mid March, will create an international mining and resources group second only in size to Alcoa, the giant US aluminium company. Assuming regulatory approval is forthcoming and no counter-bids emerge, the new group will have a market capitalisation of some $30bn, annual sales of $l9bn and a war chest of some $8bn for capital projects over the next four years.

The merger deal will create a dual-listed company with shares quoted on both the UK and the Australian stock markets, secondary listing on the Johannesburg Stock Exchange and a US Depository Receipt listing on the New York Stock Exchange.

The new company claims an enterprise value of $35bn. The synergy between the two companies has long been recognised, and talks between the two companies periodically on-going since Billiton moved to a London listing in mid-1997. In 1999, Billiton acquired BHP's manganese assets, making Billion the world's largest producer of chrome and manganese ores.

Australian group BHP is one of the world's largest producers and exporters of coal, iron ore and copper. Billiton brings to the group three new commodities; aluminium, nickel and titanium mineral sands. There is also a geographic fir with BHP's strong presence in Australia and the Americas complementing Billiton's African investments.

Impressive rescue act

In the past two and a half years he has been at the helm, BHP group's chief executive, Paul Anderson, has executed an impressive rescue from the company's previous strategic blunders, overseeing a remarkable turn-around in the company's fortunes. From reporting Australia's worst ever corporate loss of $1.14bn in 1998-9, the company posted record annual operating profits of $800m last year - assisted by higher commodity prices but achieved mainly through radical restructuring, the sale of some $3.5bn of assets, and the partial spin-off of its Australian flat steel operations.

The merger deal will see the group locate its head office in Melbourne Australia. …

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