Woodside Petroleum acquires BHP Petroleum’s for $13.8 bn

By Kritika Venkat & Akhil V (NYU), Ayushman Nath, Danissa Wan, Jack Wu, Joshua Ooi & Samuel Altass (Cambridge)

 

Overview of the deal


Acquirer: Woodside Petroleum

Target: BHP Petroleum

Total Transaction Size: $13.8 billion

Announcement date: 17 August 2021

Target advisor: Gresham Advisory Partners and Morgan Stanley Australia


Perth-based oil and gas company, Woodside Petroleum, announced to acquire 52% of BHP Petroleum in an all-stock deal for $13.8 billion. Upon completion, Woodside will issue new shares to BHP shareholders. As Woodside struggled to cope with the pandemic, the merger is vital in helping revitalize the Australian company’s dwindling stock price and improve its performance in the energy sector. With the combination of both portfolios, the merger would create the biggest energy company listed on the Australian Stock Exchange and be a global top 10 independent energy company by production. The deal aims to have a high margin oil portfolio, long and sustainable assets that will be resilient to support the accelerating demand for energy, and durable for the transition towards sustainability.


“Merging Woodside with BHP’s oil and gas business delivers a stronger balance sheet, increased cash flow and enduring financial strength to fund planned developments in the near term and new energy sources into the future.” - Woodside CEO and Managing Director Meg O’Neill

Company Details: (Acquirer - Woodside)


Woodside is Australia’s largest natural gas producer, publicly listed on the ASX. The company has exploration activities across Australia, Canada, the US, New Zealand, Myanmar, and other countries. As consumers are becoming more cognizant of environmentally friendly products and energy, Woodside prides itself on serving world-class technology and utilizing green energy to solve future challenges.


Founded in 1954, headquartered in Perth, Australia

CEO: Peter John Coleman

Number of employees: 3300

Market Cap: $14.18 USD (as of 04/09/2021)

EV: $17.83 USD

LTM Revenue: $4.2 bn

LTM EBITDA: $2.35 bn

LTM EV/Revenue: 4.22x

LTM EV/EBITDA: 7.28x


Company Details (Target - BHP Group)


Founded in 1851, the BHP Group is a global resources company involved in commodity production and extraction, primarily in Australia and the Americas. Its main segments are Petroleum, Copper, Iron Ore, and Coal. The Petroleum segment focuses on the exploration and development of Oil and Gas, whereas the Copper segment is engaged in the mining of metals including copper, gold, zinc, and uranium. While BHP has traditionally operated under a Dual Listed Company structure with parent companies in the UK and Australia (BHP Group Limited and BHP Group Plc respectively), it aims to unify this into a single Australian-based company. This new firm will have a primary listing on the ASX, along with further listings on the LSE, JSE, and NYSE.


Founded in 1851, headquartered in Melbourne, Australia

CEO: Mike P. Henry

Number of employees: 31,589

Market Cap: $153.2B (as of 03/09/2021)

EV: $164.0B

LTM Revenue: $60.8B

LTM EBITDA: $36.0B

LTM EV/Revenue: 2.7x

LTM EV/EBITDA: 4.7x


Projections and Assumptions


Short-term consequences


According to BHP, the merger will have significant synergies by massively u