Woodside and BHP Group sign merger agreement

The signing of the SSA follows the merger commitment deed announced on 17 August 2021.

On completion, the Merger will create a global top 10 independent energy company by production and one the largest energy companies listed on the ASX.¹ The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

Woodside CEO, Meg O’Neill, said the Merger would deliver enduring value for Woodside shareholders and BHP shareholders that receive Woodside shares under the Merger.

“Woodside and BHP’s respective oil and gas portfolios and experienced teams are better together. The combination will deliver the increased scale, diversity and resilience to better navigate the energy transition.

“We will have the balance sheet, cash flow and financial strength to help fund planned developments in the near-term, invest in future energy opportunities and return value to our shareholders through the cycle.

“Our emissions reduction targets will apply to the combined portfolio, supporting our aspiration to be net zero by 2050 and our strategy to supply lower-carbon energy to our customers across the globe,” she said.

The Merger documented in the SSA today is expected to deliver substantial value creation for both sets of shareholders from across a range of areas, including:

• Greater scale and diversity of geographies, products and end markets through an attractive and long-life conventional portfolio.
• Resilient, high margin operating cash flows to fund shareholder returns and business evolution to support the energy transition.
• Strong growth profile with capacity to phase the most competitive, high-return options within the portfolio.
• Proven management and technical capability from both companies.
• Shared values and focus on sustainable operations, carbon management and ESG leadership.
• Estimated synergies of more than US$400 million (100% basis, pre-tax) per annum from optimising corporate processes and systems, leveraging combined capabilities and improving capital efficiency on future growth projects and exploration.
• Greater financial resilience, relative to Woodside’s and BHP’s standalone petroleum businesses.

On completion of the Merger, Woodside will issue new shares expected to comprise approximately 48% of all Woodside shares (on a post-issue basis) as consideration for the acquisition of BHP Petroleum. The Merger ratio is based on the number of Woodside shares at the effective date. The number of new shares issued on completion will be adjusted to reflect shares issued by Woodside under its dividend reinvestment plan after the effective date.

The new Woodside shares will be distributed to BHP shareholders as an in-specie fully franked dividend.

Completion is targeted for 2Q2022. Prior to completion, Woodside and BHP will carry on their respective businesses in the normal course and will put in place appropriate plans to enable a smooth transition of ownership.

The effective date of the Merger will be 1 July 2021. On completion, Woodside will make a cash payment to BHP in relation to cash dividends paid by Woodside between the effective date and completion. BHP will make a cash payment to Woodside for the net cash flow generated by BHP Petroleum between the effective date and completion (or, if that amount is negative, Woodside will make a cash payment to BHP). Where applicable, these amounts will be netted off.

BHP Petroleum will transfer to Woodside on a cash and debt-free basis, based on the balance sheet at the effective date, subject to certain exclusions including legacy assets and liabilities that will remain with BHP.

BHP has agreed to exclusivity arrangements with Woodside. These arrangements do not restrict BHP from considering superior proposals for BHP Petroleum in prescribed circumstances. Woodside has agreed to similar exclusivity arrangements in connection with a competing proposal for Woodside.

¹On a proforma basis for the 12 months to 30 June 2021.

Read the article online at: https://www.hydrocarbonengineering.com/the-environment/22112021/woodside-and-bhp-group-sign-merger-agreement/