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Objects Of BHP Billiton's Love
Poor BHP Billiton (NYSE:BHP). The world's largest mining company certainly has the desire to make a big acquisition, and while not lacking for effort, the Anglo-Australian firm is lacking for luck. Now that Canada's government has ruled against BHP's $38.6 billion hostile takeover offer for Potash Corp. of Saskatchewan (NYSE:POT), BHP has now struck out in at least three attempts at a mega-deal.
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Prior to the collapse of the Potash bid, BHP and rival Rio Tinto (NYSE:RIO) were forced to scuttle plans for a $116 billion iron ore joint venture due to regulator concerns, and in 2008, BHP attempted a full acquisition of Rio only to see that deal die at the hands of the global financial crisis.
BHP has an acquisition addiction, that much we know, so where does this scorned lover turn to find someone more deserving of its affections? We offer up a couple of logical candidates along with one that is certainly a stretch, but not by much when some obvious factors are considered.
A Fertilizer Consolation Prize?
Along with knowing that BHP has an acquisitive nature, if you've been following the company since the start of this year, you know that it is looking to bolster its presence in the fertilizer business. BHP did just that with the $322 million purchase of Canada's Athabasca Potash in January. BHP's planned Jansen potash project in Canada may cost $10 billion to develop, Bloomberg reported, and this is another sign of the company's commitment to crop nutrients.
With global potash demand expected to rise, BHP may consider making a run at another fertilizer maker. Minnesota-based Mosaic (NYSE:MOS) would be the logical candidate. In fact, it's easy to forget that there were rumors of a BHP/Mosaic marriage in 2009, and they started up again just days after the Potash deal was scrapped.
Mosaic is the second-largest potash producer after Potash and given that Mosaic is a U.S. company, BHP may not face the political issues it faced in its run for Potash. Not to mention, Mosaic's market cap is less than $32 billion, so it would be cheaper than Potash.
A Target in the Oil Patch
While BHP is most often described as a mining company, it is one of Australia's largest oil and natural gas producers, along with maintaining a significant footprint in the Gulf of Mexico and other oil-rich locations around the globe. BHP's oil and gas presence fueled a brief rumor that BHP would consider Anadarko Petroleum (NYSE:APC) if the Potash deal fell through.
Anadarko, which had a 25% non-operating interest in the Macondo well project, has climbed almost all of the way back to its pre-spill trading level, but with a market cap near $31.5 billion and the expectation of rising oil prices, including the possibility of $100 barrels of oil in 2011, BHP would probably have to offer more for Anadarko, or at least as much as it did for Potash.
A Total Stretch ... Or Is It?
BP: That's a far-flung acquisition target for the mining company. BP (NYSE:BP), Europe's second-largest oil company, was thought to be a takeover target in the days following the Gulf spill when its shares were under heavy pressure. That talk abated for a little bit, but analysts have said if BP doesn't restore its dividend soon, investors will start dumping the stock, again making it vulnerable to a takeover.
An Australian company probably wouldn't face political opposition in attempt to buy a British firm and as we already mentioned, BHP is an oil company, too. And it's worth noting BHP is almost twice as large as BP.
This deal probably won't happen, but never say never.
Bottom Line
If BHP's history is any guide, it's a matter of time before a new acquisition target is announced. It very well could be a company that we highlighted here, or a coal or iron ore producer that hasn't yet come to light. Either way, the company's next deal (or attempted deal) is bound to be another big one. (Learn how to invest in companies before, during and after they join together. Check out The Merger - What To Do When Companies Converge.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Prior to the collapse of the Potash bid, BHP and rival Rio Tinto (NYSE:RIO) were forced to scuttle plans for a $116 billion iron ore joint venture due to regulator concerns, and in 2008, BHP attempted a full acquisition of Rio only to see that deal die at the hands of the global financial crisis.
BHP has an acquisition addiction, that much we know, so where does this scorned lover turn to find someone more deserving of its affections? We offer up a couple of logical candidates along with one that is certainly a stretch, but not by much when some obvious factors are considered.
A Fertilizer Consolation Prize?
Along with knowing that BHP has an acquisitive nature, if you've been following the company since the start of this year, you know that it is looking to bolster its presence in the fertilizer business. BHP did just that with the $322 million purchase of Canada's Athabasca Potash in January. BHP's planned Jansen potash project in Canada may cost $10 billion to develop, Bloomberg reported, and this is another sign of the company's commitment to crop nutrients.
With global potash demand expected to rise, BHP may consider making a run at another fertilizer maker. Minnesota-based Mosaic (NYSE:MOS) would be the logical candidate. In fact, it's easy to forget that there were rumors of a BHP/Mosaic marriage in 2009, and they started up again just days after the Potash deal was scrapped.
Mosaic is the second-largest potash producer after Potash and given that Mosaic is a U.S. company, BHP may not face the political issues it faced in its run for Potash. Not to mention, Mosaic's market cap is less than $32 billion, so it would be cheaper than Potash.
While BHP is most often described as a mining company, it is one of Australia's largest oil and natural gas producers, along with maintaining a significant footprint in the Gulf of Mexico and other oil-rich locations around the globe. BHP's oil and gas presence fueled a brief rumor that BHP would consider Anadarko Petroleum (NYSE:APC) if the Potash deal fell through.
Anadarko, which had a 25% non-operating interest in the Macondo well project, has climbed almost all of the way back to its pre-spill trading level, but with a market cap near $31.5 billion and the expectation of rising oil prices, including the possibility of $100 barrels of oil in 2011, BHP would probably have to offer more for Anadarko, or at least as much as it did for Potash.
A Total Stretch ... Or Is It?
BP: That's a far-flung acquisition target for the mining company. BP (NYSE:BP), Europe's second-largest oil company, was thought to be a takeover target in the days following the Gulf spill when its shares were under heavy pressure. That talk abated for a little bit, but analysts have said if BP doesn't restore its dividend soon, investors will start dumping the stock, again making it vulnerable to a takeover.
An Australian company probably wouldn't face political opposition in attempt to buy a British firm and as we already mentioned, BHP is an oil company, too. And it's worth noting BHP is almost twice as large as BP.
This deal probably won't happen, but never say never.
Bottom Line
If BHP's history is any guide, it's a matter of time before a new acquisition target is announced. It very well could be a company that we highlighted here, or a coal or iron ore producer that hasn't yet come to light. Either way, the company's next deal (or attempted deal) is bound to be another big one. (Learn how to invest in companies before, during and after they join together. Check out The Merger - What To Do When Companies Converge.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Todd Shriber
Todd Shriber was a financial journalist for five years with Bloomberg News and MergerMarket.com, covering a variety of sectors, including energy, financials and technology. He is also a Series 7 license holder and has actively traded equities, forex and options.
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