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BHP Billiton, the world's biggest mining company, has a stack of cash burning a hole in its pocket and wants to spend it on a major acquisition.
Last week, it was being tipped to bid for Canada's Potash Corporation and this week it is being linked to Woodside Petroleum, Australia's biggest oil exploration and production company, which would cost in excess of £20 billion.
Reports out of Perth overnight claim BHP, 110p dearer at 1481p, may be lining up an offer for Woodside, either on its own or in conjunction with Royal Dutch Shell, which already owns a 34% stake in Woodside. This coincides with talk in London that Shell may be looking to sell or is in the “process of arranging the sale” of its stake in Woodside, either through a bookbuilding or to a strategic buyer.
Word is, Shell, up 24p at 1526p, would then turn its firepower on another of Australia's oil giants, Santos. Speculators argue that Shell needs a bigger exposure to the liquefied natural gas market in Queensland. This is surprising, given the size of the company and compared with Conoco's A$6.5 billion investment via Origin in an asset deal and BG Group's recent acquisition of Pure Energy. BG was up 17p at 1101p.
Meanwhile, the FTSE 100 index climbed back above the 4000 level with a leap of 85.57 to 4041.18, its highest since 13 February, as the bears raced for cover and prices were squeezed higher on stock shortages. The FTSE 250 index was 193.47 higher at 6734.49.
Stock-market investors are hoping the G20 summit will find a solution to the financial crisis. Banks and miners led the way. Turbo-charged Barclays climbed 11.6p to 168.6p, almost matching the target price set by its broker Credit Suisse last week when it was trading at around 130p. HSBC added 43¼p to 454p as it built on the lead established in Hong Kong today. The shares went ex-HSBC's £12.5 billion rights issue yesterday, having lost 19% of their value during March. That compares with a 6% rally by the rest of the Hong Kong market.
Among the miners, Kazakhmys jumped 54½p to 446p, driven higher by its 26% stake in Eurasian Natural Resources, up 54½p at 503p. Citigroup has lifted its target on Kazakhmys from 315p to 396p in the wake of this week's results, but keeps its rating at hold.
Shares in Wolseley, the UK's biggest plumbing equipment supplier, appeared to be defying gravity, trading at 2615p, compared with last night's closing price of 246p. But before shareholders pop the champagne, they should be aware that for every 10 shares they owned, they now have just one after consolidation. Wolseley is preparing to tap shareholders for extra funds in the shape of a £1 billion rescue rights issue and placing to strengthen its balance sheet.
Evidence of a tentative rise in house prices in the latest Nationwide survey benefits housebuilders. Taylor Wimpey rose 5p to 28½p and Barratt Developments 13¾p to 102¾p.
