BHP sniffing around | David Taylor | Finance News Network

BHP sniffing around

by David Taylor

The resources sector is once again in the spotlight. The attention is now on two of Australia's biggest heavyweights in the mining and energy spaces - BHP Billiton and Woodside Petroleum. The rumours are rife about a potential transaction here, but if there's one thing you can be sure of: 'where there's smoke, there's fire'.

Stakeholders and politicians naturally get nervous, or even territorial (e.g. WA Premier) when a transaction like this in on the cards. The reality is though, unless a logical, reasoned argument is developed as to why the takeover shouldn't go ahead, the momentum may be too great.

Our resources sector is chock-full of a number of different companies that are the potential targets of offshore investors. See it's clear that China is a growing force in not only the region, but the world, and everyone wants a piece of the pie. A great way to get that piece is through a takeover. My feeling is that we are likely to see more consolidation in the resources space as a result. It's all about safety in numbers.

I believe it's in Australia's best interests for Woodside to team up with BHP. Of course if it goes ahead, it may also make way for many other, smaller transactions, that will ultimately lead to more capital staying within our shores.

David Taylor

Disclaimer

The content in my blog is non advisory, please do not interpret this as advice in any way shape or form. These are just my thoughts and nothing I say should be acted upon.