TIDMBHP
RNS Number : 0924T
BHP Group PLC
22 November 2021
NEWS RELEASE
Release Time IMMEDIATE
Date 22 November 2021
Release Number 28/21
BHP and Woodside agree to create a global energy company
BHP Group ( BHP ) and Woodside Petroleum Ltd ( Woodside ) have
today signed a binding share sale agreement ( SSA ) for the merger
of BHP's oil and gas portfolio with Woodside ( Merger ). Woodside
will acquire the entire share capital of BHP Petroleum
International Pty Ltd (BHP Petroleum) in exchange for new Woodside
shares.
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 the largest energy
company 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.
BHP CEO Mike Henry said BHP's petroleum business and Woodside
are better together and will create value for BHP shareholders.
"Merging our petroleum business with Woodside creates a large,
more resilient company, better able to navigate the energy
transition and grow value while doing so," he said.
"Through the merger we will provide value and choice for BHP
shareholders, and unlock synergies in how these assets are
managed."
Attractive strategic and financial rationale
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 per cent 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 BHP's and Woodside's standalone petroleum businesses
An alternative option carefully considered by the Board was to
implement a demerger through a distribution to shareholders of
shares in a newly listed entity. However, while a demerger would
result in a strong and financially viable stand-alone entity, the
Board determined that the Merger was the best alternative for
shareholders given that it would capture the additional value
flowing from the advantages and benefits outlined above.
Merger ratio
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.
Timing and completion
Completion is targeted for the second quarter of the 2022
calendar year. Prior to completion, BHP and Woodside 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. In its Financial Report for the half year
ending 31 December 2021, BHP expects to present the results of BHP
Petroleum as a discontinued operation and the BHP Petroleum balance
sheet as held for sale, subject to the status of the Merger's
conditions precedent outlined below.
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.
Warranties and indemnities
Each party has given the other party certain warranties
regarding its business. Woodside has agreed to indemnify BHP for,
among other things and subject to certain limitations,
decommissioning and environmental liabilities relating to the BHP
Petroleum business. BHP has agreed to indemnify Woodside for, among
other things and subject to certain limitations, claims in respect
of entities and assets not forming part of the Merger.
Termination rights
BHP and Woodside have termination rights (including if the other
is subject to a defined material adverse change or specified
petroleum reserve reduction) and BHP has a right to terminate upon
certain changes to Woodside's credit rating. Each party has agreed
that, if the Merger does not complete, its only recourse is a
reimbursement fee of US$160 million payable in certain
circumstances, including if Woodside's board changes, withdraws or
qualifies its recommendation that shareholders vote in favour of
the Merger (subject to certain exceptions).
Conditions
Completion of the Merger is subject to satisfaction (or waiver
where permitted) of conditions precedent by 30 June 2022 or an
agreed later date which include:
-- Approval by certain regulatory and competition authorities
-- Approval by Woodside shareholders at a general meeting
-- Independent experts appointed by Woodside issuing a report concluding that the Merger is in the best interests of
Woodside shareholders
-- Certain registration statements relating to Woodside shares being declared effective by the United States
Securities and Exchange Commission
-- Other conditions customary for a transaction of this nature
If a condition precedent has not been satisfied or waived by 30
June 2022 (or an agreed later date) either party may terminate the
SSA.
In addition, BHP and Woodside are actively seeking necessary
third-party consents resulting from the Merger and are working to
secure these consents prior to Woodside shareholders voting to
approve the Merger.
The Woodside shareholder meeting to approve the Merger is
targeted for the second quarter of the 2022 calendar year.
Woodside listings and governance
Woodside will retain its primary listing on the Australian
Securities Exchange (ASX).
Woodside is currently pursuing a secondary listing on the New
York Stock Exchange (NYSE) through an American depository receipt
(ADR) arrangement, with a target of being active by completion. The
NYSE listing would provide increased access to international equity
and debt markets. Additional secondary listings are being
evaluated.
It is intended that the Woodside Board will appoint a current
BHP director as a Woodside director on completion.
Integration and transition
BHP and Woodside have also executed an integration and
transition services agreement (ITSA) which provides for the
planning of post-completion integration activities, activities to
separate BHP Petroleum and its petroleum business from the BHP
Group, and a framework for transition services to be provided by
BHP after completion.
About BHP
BHP is the world's largest diversified natural resources company
by market capitalisation with over 80,000 employees and
contractors, primarily in Australia and the Americas. BHP's
products are sold worldwide and it is among the world's top
producers of major commodities, including iron ore, copper, nickel
and metallurgical coal.
BHP pioneered the development of an oil and gas industry in
Australia with the Bass Strait discovery in 1965. The BHP petroleum
business has conventional oil and gas assets in the US Gulf of
Mexico, Australia, Trinidad and Tobago, and Algeria, and appraisal
and exploration options in Mexico, Trinidad and Tobago, western US
Gulf of Mexico, Eastern Canada, and Barbados.
The crude oil and condensate, gas and natural gas liquids (NGLs)
produced by BHP's petroleum assets are sold on the international
spot market or domestic market. The total gross asset value of the
BHP petroleum business as at 30 June 2021 was US$15.4 billion, it
contributed US$3.9 billion to BHP group revenue and it generated
EBITDA of US$2.3 billion for the year ended 30 June 2021.
Authorised for lodgement by:
Stefanie Wilkinson
Group Company Secretary
Media Relations Investor Relations
Email: media.relations@bhp.com Email: investor.relations@bhp.com
Australia and Asia Australia and Asia
Gabrielle Notley Dinesh Bishop
Tel: +61 3 9609 3830 Mobile: Mobile: +61 407 033 909
+61 411 071 715
Europe, Middle East and Africa
Europe, Middle East and Africa
James Bell
Neil Burrows Tel: +44 2078 027 144 Mobile:
Tel: +44 20 7802 7484 Mobile: +44 7961 636 432
+44 7786 661 683
Americas
Americas
Brian Massey
Judy Dane Tel: +1 713 296 7919 Mobile:
Tel: +1 713 961 8283 Mobile: +1 832 870 7677
+1 713 299 5342
BHP Group Limited ABN 49 004 BHP Group plc Registration
028 077 number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, Registered Office: Nova South,
171 Collins Street 160 Victoria Street
Melbourne Victoria 3000 Australia London SW1E 5LB United Kingdom
Tel +61 1300 55 4757 Fax +61 Tel +44 20 7802 4000 Fax +44
3 9609 3015 20 7802 4111
Members of the BHP Group which is
headquartered in Australia
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Disclaimer and important notice
Forward-looking statements
This announcement contains forward-looking statements. The words
'anticipate', 'believe', 'aim', 'estimate', 'expect', 'intend',
'may', 'target', 'plan', 'forecast', 'project', 'schedule', 'will',
'should', 'seek' and other similar words or expressions are
intended to identify forward-looking statements. These
forward-looking statements are based on assumptions and
contingencies that are subject to change without notice and involve
known and unknown risks, uncertainties and other factors, many of
which are beyond the control of Woodside, BHP and their respective
related bodies corporate and affiliates, and each of their
respective directors, officers, employees, partners, consultants,
contractors, agents, advisers and representatives, and could cause
results, performance or achievements to be materially different
from the results, performance or achievements that are or may be
expressed or implied by those forward-looking statements or any
projections or assumptions on which those statements are based.
The forward-looking statements are subject to risk factors,
including those associated with the oil and gas industry as well as
those in connection with the Transaction. It is believed that the
expectations reflected in these statements are reasonable, but they
may be affected by a range of variables which could cause actual
results or trends to differ materially, including but not limited
to: price fluctuations, actual demand, currency fluctuations,
geotechnical factors, drilling and production results, gas
commercialisation, development progress, operating results,
engineering estimates, reserve estimates, loss of market, industry
competition, environmental risks, physical risks, legislative,
fiscal and regulatory developments, economic and financial markets,
conditions in various countries, approvals and cost estimates.
Investors are strongly cautioned not to place undue reliance on
forward-looking statements, particularly in light of the current
economic climate and the significant uncertainty and disruption
caused by the COVID-19 pandemic. Forward-looking statements are
provided as a general guide only and should not be relied on as an
indication or guarantee of future performance. These statements may
assume the success of the Transaction, BHP's oil and gas portfolio
or Woodside's business strategies, the success of which may not be
realised within the period for which the forward-looking statements
may have been prepared, or at all. No guarantee, representation or
warranty, express or implied, is made as to the accuracy,
likelihood of achievement or reasonableness of any forecasts,
prospects, returns, statements or tax treatment in relation to
future matters contained in this presentation.
Past performance and pro forma historical information is given
for illustrative purposes only. Pro forma information is presented
on a combined basis, without giving effect to any pro forma
adjustments. It should not be relied on and is not indicative of
future performance, including future security prices.
No offer or solicitation
This communication relates to the proposed Transaction between
Woodside and BHP. This communication is not intended to and does
not constitute an offer to sell or the solicitation of an offer to
subscribe for or buy any securities or a solicitation of any vote
or approval with respect to the Transaction or otherwise, nor shall
there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities in
the United States shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of
1933.
Important additional information and where to find it
In connection with the proposed Transaction, Woodside intends to
file with the US Securities and Exchange Commission (the "SEC") a
registration statement on Form F-4 (the "Registration Statement")
to register the Woodside securities to be issued in connection with
the proposed Transaction (including a prospectus therefor).
Woodside and BHP also plan to file other documents with the SEC
regarding the proposed Transaction. This communication is not a
substitute for the Registration Statement or the prospectus or for
any other document that Woodside or BHP may file with the SEC in
connection with the Transaction. US INVESTORS AND US HOLDERS OF
WOODSIDE AND BHP SECURITIES ARE URGED TO READ THE REGISTRATION
STATEMENT, PROSPECTUS AND OTHER DOCUMENTS RELATING TO THE PROPOSED
TRANSACTION (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO THOSE
DOCUMENTS) THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT WOODSIDE, BHP AND THE PROPOSED
TRANSACTION. Shareholders will be able to obtain free copies of the
Registration Statement, prospectus and other documents containing
important information about Woodside and BHP once such documents
are filed with the SEC, through the website maintained by the SEC
at http://www.sec.gov. Copies of such documents may also be
obtained from Woodside and BHP without charge.
[1] On a proforma basis for the 12 months to 30 June 2021.
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END
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