BHP & WDS

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Question asked 02/07/2022

BHP & WDS

Hi James, A different question BHP & WDS have recently exchanged some large assets and BHP has paid out large amounts of cash to its shareholders . My question is what is the best way from an analyst perspective to compare historical information with the current entities under their new asset structure. Most importantly its current share price. For example is the current price of BHP of $42 similar to $50 when it held its oil assets. What is their expected trading range with the new asset structure? Regards Michael

Answer

HI Michael,

There was actually no cash paid out to shareholders, it was a dividend paid in WDS shares as BHP sold them their petroleum business. To understand the value of this, we simply add the value of our WDS shares distributed to the value of the BHP shares. So, for every 5.534 BHP shares held, we got 1 WDS share plus franking. So, the ‘dividend’ which is paid in WDS shares was worth $5.38 plus franking = $7.68 per BHP share. Essentially, we add that value to our BHP holding to get the true level of BHP. In terms of expected trading range, ~$38-$48 would be our suggested levels.

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BHP Group (BHP)

LAST UPDATED 01/07/2022 14:19

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