ACCC gives the nod to BHP Petroleum-Woodside merger

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Highlights

  • The ACCC gave the green light to Woodside Petroleum's agreed US$28-billion merger with BHP Petroleum.
  • Australia’s competition regulator said it found Woodside would continue to face competition from several suppliers after the deal.
  • Woodside plans to put the merger to a shareholder vote in the second quarter of 2022.

The Australian Competition and Consumer Commission (ACCC) on Thursday gave the green light to Woodside Petroleum's (ASX:WPL) agreed US$28-billion merger with BHP Petroleum International Pty Ltd, a wholly owned subsidiary of BHP (ASX:BHP).

Australia’s competition regulator said it found Woodside would continue to face competition from several suppliers after the deal. The merger would lead to the creation of a global top-10 independent oil and gas producer. The merged company will have a long-life LNG asset, a high-margin oil portfolio, and financial resilience to supply the energy required for the overall growth as well as development over the energy transition.

“We examined the proposed acquisition closely as it would combine two of the four largest domestic natural gas suppliers in Western Australia,” ACCC Chair Rod Sims said.

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“We found that post acquisition, Woodside would continue to face competition from a range of suppliers of domestic gas, including major producers Chevron and Santos, and several other smaller suppliers, including Shell and ExxonMobil,” he said.

Woodside will have a 20% share in the domestic gas market after the deal and it plans to put the merger to a shareholder vote in the second quarter of 2022.

According to the merger agreement, Woodside will purchase BHP's entire share capital in exchange for new Woodside shares. The merger commitment deed was conducted on 17 August 2021.

“In Western Australia, gas exporters are required to reserve the equivalent of 15% of their export production for the domestic market, ensuring that domestic gas will continue to be available from Woodside and BHP Petroleum’s export assets, and a range of other competitors,” Sims noted.

BHP and WPL ended their respective sessions at AU$41.07 and AU$22.04 per share on the ASX on Wednesday.

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