After failing to be allowed to acquire Potash Corp. (NYSE:POT) by the Canadian government, BHP Billiton (NYSE:BHP) had a lot of financial writers assume they may pull back and go after smaller acquisition targets.
According to BHP Chairman Jac Nasser that's not the case, and the company won't be lowering its target to go after what he called "second tier" assets.
Three huge failed deal attempts over the last couple of years has generated the speculation BHP may have to look for smaller assets to buy.
That's one of the problems companies the size of BHP face, is they have to acquire large targets in order to move the bottom line of the company, which CEO Marius Kloppers has been under pressure to do.
If BHP were looking only for mining assets and not general commodity assets, it would be understood that they would be very limited. But when they take into account all commodity or raw material sectors, there are a wider number of possibilities for them.
The challenge for BHP is the premium prices driving the market at this time after the majority of commodity prices have risen for some time.
An example of a company that would have made sense for them is Bucyrus (Nasdaq:BUCY), even though it was much smaller than Potash.
What Bucyrus has to offer is almost an immediate return on investment, and with the bull commodity market expected to continue on for years, even if there are temporary interruptions, Bucyrus would be the type of company, when added to a couple of more, which would have made sense for BHP.
Hitting several singles is as good as hitting a home run, but evidently BHP doesn't operate under those assumptions.
Showing posts with label Marius Kloppers. Show all posts
Showing posts with label Marius Kloppers. Show all posts
Wednesday, November 17, 2010
Monday, November 15, 2010
BHP Billiton (NYSE:BHP) Starts Buying Back Shares
Under pressure from shareholders, and with little to show over the last several years from failed attempts to acquire Rio Tinto (NYSE:RIO), and trying to merge iron ore operations with them, along with not being able to successfully acquire Potash Corp. (NYSE:POT), BHP Billiton Ltd. (NYSE:BHP) has decided to buy back shares, evidently considering that the best use of extra capital at this time.
BHP and CEO Marius Kloppers probably wouldn't want to undertake another acquisition attempt any time soon, as a failure could end Kloppers' tenure at the company and show weakness as to his ability to get a deal done.
This is really a resumption of a buyback program which has been suspended in 2007, where they were going to back $13 billion of their own shares. Now they're going to acquire another $4.2 billion in shares, BHP said in a statement today.
Some had thought BHP was going to buy back a larger amount of shares, generating the question as to whether or not they have any contingency plans in place.
Shareholders have also pressured BHP to make acquisitions for the purpose of growth, buy it seems they've decided to accept buying back of shares rather than the pursuit of other companies at this time.
BHP and CEO Marius Kloppers probably wouldn't want to undertake another acquisition attempt any time soon, as a failure could end Kloppers' tenure at the company and show weakness as to his ability to get a deal done.
This is really a resumption of a buyback program which has been suspended in 2007, where they were going to back $13 billion of their own shares. Now they're going to acquire another $4.2 billion in shares, BHP said in a statement today.
Some had thought BHP was going to buy back a larger amount of shares, generating the question as to whether or not they have any contingency plans in place.
Shareholders have also pressured BHP to make acquisitions for the purpose of growth, buy it seems they've decided to accept buying back of shares rather than the pursuit of other companies at this time.
Thursday, November 11, 2010
Where Will BHP (NYSE:BHP) Invest its Cash?
Now that the Potash (NYSE:POT) deal is all but over for BHP (NYSE:BHP), rumors continue to circulate as to what would be the best way for the company to invest its cash.
While acquisitions are sure to remain on the table, pressure from shareholders could result in BP using some of the capital, possibly as much as $10 billion to buy back shares in the company.
As high as that is, BHP would still have plenty to make acquisitions with.
With Kloppers wanting a win in the acquisition area, it seems more likely he'll continue to look for deals rather than buy back shares.
If Kloppers and the board do decide to buy back shares, it would mean he would have to start looking for smaller acquisitions than the ones he has pursued unsuccessfully over the last several years, and may actually be good for him and the company.
Either way, now that acquisitions have been failing, shareholders are increasing pressure on the company to repurchase shares. Kloppers may decide to end up doing both.
While acquisitions are sure to remain on the table, pressure from shareholders could result in BP using some of the capital, possibly as much as $10 billion to buy back shares in the company.
As high as that is, BHP would still have plenty to make acquisitions with.
With Kloppers wanting a win in the acquisition area, it seems more likely he'll continue to look for deals rather than buy back shares.
If Kloppers and the board do decide to buy back shares, it would mean he would have to start looking for smaller acquisitions than the ones he has pursued unsuccessfully over the last several years, and may actually be good for him and the company.
Either way, now that acquisitions have been failing, shareholders are increasing pressure on the company to repurchase shares. Kloppers may decide to end up doing both.
BHP (NYSE:BHP) May Acquire Woodside says Morgan Stanley (NYSE:MS)
Joining the chorus of commentators and analysts hyping the possibility BHP Billiton (NYSE:BHP) may target Woodside Petroleum Ltd. is Morgan Stanley (NYSE:MS), who believes they will be a target of BHP if the Potash (NYSE:POT) remains closed to the mining giant.
With little chance of the Canadian government changing their minds, Morgan is essentially saying Woodside is the next target of BHP CEO Marius Kloppers.
Morgan Stanley said, “The path to a successful takeover of Woodside is now less challenging for either BHP or another suitor. BHP is “acquisitive and cashed up” they added, citing the improbability of being opposed by the Australian Foreign Investment Review Board.
“Should BHP fail to change the view of the Canadian government in the next 30 days on Potash Corp., we expect the market to focus on BHP potentially acquiring Woodside,” concluded Morgan Stanley in their report.
Neither company has commented on the media stories so far.
If something was to happen that quickly after the failed bid for Potash, Kloppers would have to be extremely careful that he wouldn't fail in this next bid, as his ability to get an acquisition deal done hasn't been proven yet, and he needs to win if he rebounds back into the acquisition market that quickly.
With little chance of the Canadian government changing their minds, Morgan is essentially saying Woodside is the next target of BHP CEO Marius Kloppers.
Morgan Stanley said, “The path to a successful takeover of Woodside is now less challenging for either BHP or another suitor. BHP is “acquisitive and cashed up” they added, citing the improbability of being opposed by the Australian Foreign Investment Review Board.
“Should BHP fail to change the view of the Canadian government in the next 30 days on Potash Corp., we expect the market to focus on BHP potentially acquiring Woodside,” concluded Morgan Stanley in their report.
Neither company has commented on the media stories so far.
If something was to happen that quickly after the failed bid for Potash, Kloppers would have to be extremely careful that he wouldn't fail in this next bid, as his ability to get an acquisition deal done hasn't been proven yet, and he needs to win if he rebounds back into the acquisition market that quickly.
Wednesday, November 10, 2010
Is BHP's (NYSE:BHP) Marius Kloppers Becoming a Liability?
There is pretty much one thing on the mind of shareholders of BHP Billiton (NYSE:BHP), and that is expansion. And the nature of the business of BHP is it will have to be, for the most part, expansion through acquisition.
What's interesting about this from the point of view of BHP CEO Marius Kloppers, is it seems he has something else on his mind besides expansion alone when he's making these attempted deals, which three in a row have failed.
Although the attempted deal with Rio Tinto (NYSE:RIO) failed, it actually did something much more profound for the iron ore industry, and that was to break up the cartel-like steelmakers who had had the best of the pricing deals on an annual basis.
Kloppers changed that with his imposition of a pricing system of a much shorter duration and which was based on spot market prices of iron ore.
After following Kloppers and the way he bid for Potash Corp. (NYSE:POT), it made me wonder if he had a secondary and more important agenda in the bid, which would be to expose and weaken Canpotex, the price-fixing, potash marketing monopoly in Canada, which was the reason for the deal being rejected, contrary to any other reasons asserted.
Kloppers said from the beginning that he would eventually leave Canpotex and compete on market conditions rather than the artificial holding back of production in order for the socialist Canadian province of Saskatchewan to continue taking in royalties at prices they prefer.
With BHP having recently acquired a large potash project in Canada, it could have been his purpose to undermine the cartel and monopoly in order to do things his way when production begins.
Some believed if Kloppers didn't get Potash his job may be in trouble, but I'm not yet convinced of that. The share price of the company is hovering near all-time highs, and you just can't get much better than that as far as performance goes.
The question is what type of future is Kloppers preparing for BHP shareholders, and there's where the weak point of his performance is, or at least is perceived to be.
But one has to take into account the way he led the battle against China and others to implement the new pricing system for iron ore, and that will benefit BHP in the long run from that segment of the company.
The other question about Kloppers is if he has good insight when attempting to make deals. With Rio many feel he shouldn't have bothered with the attempted merger with their iron ore business, as it never had any chance of being allowed to go through with the opposition in many countries around the world.
One thing to like about Kloppers was his unwillingness to overspend on Potash, when he could have increased the bid by a lot more and not diluted BHP much, although they would have had to work through the added costs over time.
Pressure is slowly mounting on Kloppers to come up with something, and it may be he will have to add several smaller companies to make the type growth impact shareholders want to see.
The challenge he and all others in mining and raw materials face is everything is at a premium price now, and very little could be acquired at a good price.
So to placate investors he may have to pay out more than he would ever want to in order to show a commitment to growth. Doing that with smaller companies is much safer and probable than with the huge companies he's been targeting.
What's interesting about this from the point of view of BHP CEO Marius Kloppers, is it seems he has something else on his mind besides expansion alone when he's making these attempted deals, which three in a row have failed.
Although the attempted deal with Rio Tinto (NYSE:RIO) failed, it actually did something much more profound for the iron ore industry, and that was to break up the cartel-like steelmakers who had had the best of the pricing deals on an annual basis.
Kloppers changed that with his imposition of a pricing system of a much shorter duration and which was based on spot market prices of iron ore.
After following Kloppers and the way he bid for Potash Corp. (NYSE:POT), it made me wonder if he had a secondary and more important agenda in the bid, which would be to expose and weaken Canpotex, the price-fixing, potash marketing monopoly in Canada, which was the reason for the deal being rejected, contrary to any other reasons asserted.
Kloppers said from the beginning that he would eventually leave Canpotex and compete on market conditions rather than the artificial holding back of production in order for the socialist Canadian province of Saskatchewan to continue taking in royalties at prices they prefer.
With BHP having recently acquired a large potash project in Canada, it could have been his purpose to undermine the cartel and monopoly in order to do things his way when production begins.
Some believed if Kloppers didn't get Potash his job may be in trouble, but I'm not yet convinced of that. The share price of the company is hovering near all-time highs, and you just can't get much better than that as far as performance goes.
The question is what type of future is Kloppers preparing for BHP shareholders, and there's where the weak point of his performance is, or at least is perceived to be.
But one has to take into account the way he led the battle against China and others to implement the new pricing system for iron ore, and that will benefit BHP in the long run from that segment of the company.
The other question about Kloppers is if he has good insight when attempting to make deals. With Rio many feel he shouldn't have bothered with the attempted merger with their iron ore business, as it never had any chance of being allowed to go through with the opposition in many countries around the world.
One thing to like about Kloppers was his unwillingness to overspend on Potash, when he could have increased the bid by a lot more and not diluted BHP much, although they would have had to work through the added costs over time.
Pressure is slowly mounting on Kloppers to come up with something, and it may be he will have to add several smaller companies to make the type growth impact shareholders want to see.
The challenge he and all others in mining and raw materials face is everything is at a premium price now, and very little could be acquired at a good price.
So to placate investors he may have to pay out more than he would ever want to in order to show a commitment to growth. Doing that with smaller companies is much safer and probable than with the huge companies he's been targeting.
Tuesday, November 9, 2010
BHP (NYSE:BHP) Eyes Woodside Petroleum, Anadarko Drops (NYSE:APC)
BHP Billiton Ltd. (NYSE:BHP) reportedly has turned its focus to the oil industry after the probable failure in acquiring fertilizer giant Potash Corp. (NYSE:POT).
Interesting to BHP has been Woodside Petroleum for Australia, and Anadarko Petroleum Corp. (NYSE:APC), which has drawn attention of late because of its ownership with BP (NYSE:BP) in the Macondo well, where the Deepwater Horizon oil rig exploded, leading to the oil spill fiasco.
It seems the nod going forward is for Woodside Petroleum, which after that seems to be the direction BHP is taking, Anadarko plummeted on the probability.
That news came from an analyst at Sanford C. Bernstein & Co., although confirmation as of this writing hasn't been made.
BHP CEO Marius Kloppers remains under pressure to grow the company through acquisition, where he has failed three times in a row. Some have questioned some of the decisions he made, especially the one where he wanted to merge iron ore operations with Rio Tinto (NYSE:RIO), which was valued at well over $100 billion.
Anadarko plunged after the news, closing at $64.71, losing $2.90, or 4.29 percent.
Interesting to BHP has been Woodside Petroleum for Australia, and Anadarko Petroleum Corp. (NYSE:APC), which has drawn attention of late because of its ownership with BP (NYSE:BP) in the Macondo well, where the Deepwater Horizon oil rig exploded, leading to the oil spill fiasco.
It seems the nod going forward is for Woodside Petroleum, which after that seems to be the direction BHP is taking, Anadarko plummeted on the probability.
That news came from an analyst at Sanford C. Bernstein & Co., although confirmation as of this writing hasn't been made.
BHP CEO Marius Kloppers remains under pressure to grow the company through acquisition, where he has failed three times in a row. Some have questioned some of the decisions he made, especially the one where he wanted to merge iron ore operations with Rio Tinto (NYSE:RIO), which was valued at well over $100 billion.
Anadarko plunged after the news, closing at $64.71, losing $2.90, or 4.29 percent.
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