| Thu 9 Jun 2005, 15:16 | | Australia’s fertiliser players eye WMC takeover fa |
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Australia’s fertiliser players eye WMC takeover fallout
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MELBOURNE — A sale by BHP Billiton of the fertiliser business acquired in its takeover of WMC Resources would attract wide interest within the agricultural sector, analysts said yesterday.
BHP Billiton was likely to seek a quick sale of the unit, which is seen standing outside of WMC Resources’ main nickel, copper and uranium mining operations, they said.
“I think it will be on the market pretty quickly,” said Daiwa Securities analyst Mark Pervan. “I don’t think they will want to sit holding it on the balance sheet.”
The unit was originally valued at A$1bn in 2000, but has since been written down to A$500m due to production setbacks.
The business comprises the Queensland Fertiliser Operations manufacturing arm and a 33,3% stake in a marketing and distribution joint venture with grain company AWB and rural services company Futuris.
BHP Billiton said earlier this year it would probably sell the business if it bought WMC.
The group, whose A$9,2bn takeover offer for WMC closes on June 17, currently holds almost 80% of WMC’s shares.
“We are still reviewing the fertiliser business,” a BHP Billiton spokesman said.
Wesfarmers, which makes fertiliser in Western Australia, said it could be a suitor.
“We have indicated that we would be interested in having a look at the assets if and when they become available,” said a Wesfarmers spokesman.
Australia’s largest fertiliser group Incitec Pivot, 70% owned by Orica, is also a potential buyer, particularly of the unit’s manufacturing arm.
“We’d be interested in it,” said a company spokesman.
Patersons Securities analyst Rob Brierley said the assets would be a natural fit for AWB or Futuris.
The companies entered the distribution venture amid concern about dominance by Incitec Pivot, estimated to have more than 75% of Australia’s eastern market.
“Wesfarmers will always look at things, but I would be surprised if they acquired the asset,” Brierley said.
“It would be hard for them to extract the benefits from that sort of purchase that someone like a Futuris or an AWB could do.”
AWB said it would look at acquisitions that were a “natural fit within our business and which meet our financial criteria”, while Futuris said a sale was still speculative and declined further comment.
Another potential buyer is US-based Cargill, which has distributed WMC’s fertiliser internationally.
WMC’s share price moved 0,13% or $0,01 higher at $7,86 yesterday. Reuters
