Talk of potential $46 billion BHP Billiton bid for Woodside stirs market: Midday Roundup

The Australian market is buzzing with the prospect of a BHP Billiton bid for oil and gas giant Woodside in what could be Australia’s biggest ever takeover.

According to reports, the dual-listed BHP is in talks with Woodside’s major shareholder, Royal Dutch Shell, which raised eyebrows by trimming its stake in the Perth group last year.

Woodside shares had lifted on the speculation BHP might make a bid for it, to gain greater exposure to the booming oil and gas sector, but there are questions about whether a bumper offer would get State or Federal Government approval.

West Australian Premier Colin Barnett has already spoken out at the prospect of a takeover.

Critics also point to the M&A history of BHP Billiton head Marius Kloppers, who has three failed deals his name: a Rio Tinto takeover, an iron ore joint venture with Rio and a takeover of Canada’s Potash Corporation.

According to talk, Shell would pick up some of BHP’s assets, such as the Sunrise gas field, for the Woodside 24% stake.

Shares in both companies rose, with Woodside up 5.44% to $49.83 just before midday.

BHP has also completed a bumper share buyback.

Personal finance commitments sag in February

New data from the Australian Bureau of Statistics has shown personal finance commitment dropped 3.5% on a seasonally adjusted basis in February.

The ABS said housing finance for owner-occupiers dropped 4.8% to $13.16 billion, while commercial finance fell 6.6% to $28.66 billion.

Leighton Holdings disappoints

Elsewhere in company news, construction giant Leighton Holdings has disappointed with reduced full-year guidance and plans for a $757 million capital raising.

Leighton, which last year replaced long-time chief Wal King with David Stewart, now expects an annual loss of $427 million, versus predictions of a $480 million profit.

The entitlement offer, at $22.50 per share, is a 22% discount to its last closing price.

“While it is very frustrating to have to deal with the financial consequences, it does now leave Leighton well positioned to return to more normalised growth and earnings in 2011/12 and beyond,” Mr Stewart told the market.

Yet another record for the Australian dollar

The local currency reached yet another record this morning, after reaching new heights last week. This morning it reached a fresh post-float high of $US105.68, exceeding Friday night’s record of $US105.39.

And the highs are tipped to continue, with AMP chief economist Shane Oliver tipping the Australian dollar could reach $US1.10 by the year’s end, spurred by Asian demand for local commodities.

He said the strong Australian dollar boosts our living standards by enabling us to buy more from overseas.

CMC Markets senior FX dealer Tim Waterer says traders are still viewing the Australian dollar as an “attractive prospect even at these high levels, particularly with the gold price moving ever closer to the psychological $US1500 level.”

Australian market higher at noon

After a flat start, the market was slightly higher at noon, boosted by strong commodity prices and shrugging off a negative lead from Wall Street and weak finance figures.

At midday, the ASX/S&P 200 was up 0.22% to 4951.5, while the All Ordinaries index was also 0.2% higher at 5046.

Strong commodity prices and the prospect of a BHP-Woodside tie-up put fire in the resources stocks, but the big banks were weaker.