It’s Official: BHP-WPL enter merger commitment deed

Highlights

  • BHP Group and Woodside Petroleum have signed a merger commitment deed to join their respective oil and gas assets.
  • Through an all-stock merger deal, Woodside will distribute newly issued shares to BHP shareholders.
  • The combined entity will be among the world’s top 10 companies by production capacity within the LNG industry, boasting a high margin oil portfolio and long-life LNG assets.

BHP Group Limited (ASX:BHP) has put an end to all speculations as the Company announced entering a merger commitment deed with Woodside Petroleum Limited (ASX:WPL) to join their respective oil and gas assets through an all-stock merger deal.

What are the transaction terms of the BHP-WPL merger deal?

According to the announcement, Woodside will distribute newly issued shares to BHP shareholders. Existing Woodside shareholders will own 52 per cent of the newly expanded Woodside, while the remaining 48 per cent will be owned by existing BHP shareholders.

The deal will close post receiving regulatory and shareholder approvals along with successful completion of confirmatory due diligence and other formalities associated with the closure of the deal.

The deal is expected to close in Q2 CY2022 with an effective date of 1 July 2021.

Related Read: Mining behemoth BHP is expected to exit the petroleum business

What are the benefits associated with the deal?

Both the companies will combine their premium asset portfolio to build the largest energy entity listed on ASX.

The combined entity will be among the world’s top 10 players by production capacity within the LNG industry, boasting a high margin oil portfolio and long-life LNG assets.

Source: Copyright © 2021 Kalkine Media

The financial strength attained through the merger will support shareholder return and business evolution required to support energy transition.

The deal will allow the combined entity access to larger and diversified geographies along with an expanded product portfolio and end-markets.

The deal will help woodside achieve targeted Scarborough final investment decision (FID) in CY21 and attain the capacity to phase the extremely competitive, high-return possibilities in the portfolio.

The combined entity will boast proven management and technical capability from both WPL and BHP.

The deal can create over US$400 million estimated synergies annually through leveraging combined capabilities, improving corporate systems and processes, and enhancing capital efficiency on future exploration and growth projects.

Related Read: Why should investors keep Woodside Petroleum on their radar?

What did the management say?

Woodside CEO and Managing Director Meg O’Neill commented:

Source: ASX announcement, 17 August 2021

BHP CEO Mike Henry commented:

Source: ASX announcement, 17 August 2021

Bottomline

The share of BHP and WPL will be on investors’ radar as the combined entity creates a long-life asset portfolio poised to take advantage of greater geographical diversity with an enhanced product portfolio and larger end markets. 

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