BHP +3.18%: The divestment of BHP’s oil unit is getting closer to completion and by extension the dividend returns to shareholders. Acquiror, Woodside Petroleum (WPL), received a final regulatory approval (National Offshore Petroleum Titles Administrator) on 17 May, the only outstanding condition now for the merger is Woodside shareholder approval, which is set for 2022 AGM on 19-May-22 (tomorrow). Based on the agreed merger terms with WPL, BHP will own 48% of the expanded WPL amounting to ~US$20bn or A$28bn. This is almost 80% higher than when BHP first announced the intention to divest petroleum (August 2021). WPL is making the ~$28bn consideration via WPL shares (918.4m) & the ATO has ruled that BHP can pass thru this payment to BHP shareholders in the form of a BHP dividend (albeit in the form of WPL shares). Importantly, this dividend will be fully franked – we estimate the franking value adds ~A$2.50/share. Based on BHP’s current share count and the current WPL share price, BHP shareholders are expected to receive a dividend of around A$5.60/share (17 May close). We also note that BHP generously “rounded-up” the merger ratio form 0.1768WPL/BHP shares to ~0.18 giving BHP s’holders another little but handy windfall. Our FY22 dps includes the “special”.
Key dates
· WPL scheme vote: 19 May (yep, that’s tomorrow!),
· Ex-date: Wednesday 25 May,
· Record date: Thursday 26 May
· Completion Date: Wednesday 1 June i.e. WPL takes over the keys to BHP Petroleum
· Pay date: Is effectively 1 June, share certificates will likely be out a few days later.
Other pertinent details – The cost base of the new WPL shares will be based on the closing price on 31 May 2022.
MM remains long & bullish BHP
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