50 Saturday April 9 2022 | the times
Business
5
The deal to spin off BHP’s oil and gas
business in a $40 billion merger with
Woodside Petroleum has moved a step
closer to completion after an indepen-
dent report backed the plan.
The world’s biggest mining group
struck its initial agreement for the all-
share merger of BHP Petroleum with
Woodside, of Australia, last August, but
it still requires approval from a majority
of Woodside’s shareholders at a vote
next month.
Facing opposition from some share-
holders, Woodside commissioned an
independent report from KPMG to
assess the merits of the deal.
Under the proposal, Woodside would
acquire BHP Petroleum in exchange
for issuing BHP with new shares in the
merged group. BHP will hand these to
its shareholders, who are expected to
receive one share in the enlarged
Woodside for every 5.5 BHP shares
they hold.
KPMG said in its report that the pro-
posed deal was “fair” to Woodside
shareholders because it estimated that
their shares in the merged group would
be worth more than their shares in the
standalone company. It also concludedReport adds fuel to BHP’s
$40bn deal with Woodside
that “the aggregate 52 per cent interest
that Woodside shareholders will hold in
the merged group is broadly consistent
with Woodside’s contribution to the
merged group”.
KPMG estimated that the value of
the combined company would be
between $37.2 billion and $42.3 billion.
Richard Goyder, Woodside’s chair-
man, said that its board had unani-
mously backed the deal, which brought
together “the best of both organisations
to create a global independent energy
company with the scale, diversity and
resilience to create value for share-
holders”. Woodside will seek a standard
listing in London on completion of the
merger.
BHP announced the oil division
spin-off as part of a wider overhaul in
which it also unified its dual corporate
structure behind a primary listing in
Australia. It left the FTSE 100 this year.
The group produces commodities
including iron ore, copper and coal and
is seeking to increase its investment in
“future-facing” commodities such as
metals used in electric vehicle batteries.
It reported net profits of $11.3 billion in
the year to June 2021.
Shares in BHP closed up 63½p, or
2,2 per cent, at £30.01.Emily GosdenFears that Russia’s invasion of Ukraine
would deal a heavy blow to Ferrexpo
were eased yesterday when the iron ore
producer reported that its first-quarter
production was close to normal.
The Ukrainian FTSE 250 group had
warned in February that it would be
unable to make deliveries to some
customers after the port it uses for sea-
borne exports was closed because of the
conflict. However, it has managed to
sell the vast majority of its output, as rail
and barge routes have remained open.
The news provided a fillip to the
company’s share price, which fell from
just under 248p just before the war
began to as low as 116p in early March.
Yesterday the shares rose 18p, or
10.8 per cent, to close at 185¾p.
Ferrexpo said that it had produced
2.7 million tonnes of iron ore pellets in
the first quarter, down only 11 per cent
on the fourth quarter and in line with
the same period a year earlier, after
scaling back its production “to meet
accessible pellet demand”. It sold
2.6 million tonnes in the three-month
period and its net cash position rose to
$159 million, from $117 million at the
end of 2021.
Jim North, 52, Ferrexpo’s chief
executive, said: “Our operations and
local communities are outside the main
conflict zones within Ukraine, enabling
us to continue our activities, including
the delivery of iron ore pellets to cus-
tomers in Europe via rail and barge,
which have historically represented
approximately 50 per cent of sales.
“The port of Pivdennyi in southwest
Ukraine, where the group’s berth is
located, remains closed and we are re-
viewing alternative methods of deliver-
ing our products to seaborne markets.”
Ferrexpo has three mines near the
city of Horishni Plavni and producedFerrexpo exports
from Ukraine ‘at
close to normal’
11.2 million tonnes of iron ore pellets
last year. It has postponed publication
of its annual results because of the
conflict.
Analysts at Peel Hunt, the broker,
hailed a “surprisingly strong first quar-
ter” and said that Ferrexpo was “in a
better position than we feared...
Despite the tragedy unfolding in
Ukraine, so far Ferrexpo has been able
to maintain nearly normal production.”
They had “assumed that with the
port closed Ferrexpo would suffer a
much larger interruption to its salesthan was actually the case. With Rus-
sian pellet material under sanction, we
suspect European mills are increasing
their demand for Ferrexpo’s material.”
Ben Davis, at Liberum Capital, the
broker, said: “Despite the horrific con-
ditions in the country, Ferrexpo opera-
tions admirably continue.
“No doubt as the market learns
that Ferrexpo is still a robust, cash-
generating company, capable of paying
dividends, it will likely become an
attractive yield play. However, we
would not expect Ferrexpo to material-
ly re-rate until the war ends.”Emily Gosden Energy Editor6 Deloitte has resigned as the
auditor of Polymetal International.
Last month, Deloitte said it would
no longer operate in Russia and it
confirmed yesterday it was unable to
work with the Anglo-Russian gold
and silver miner. Polymetal said:
“Following the announcement on
March 7 that Deloitte’s Russian and
Belarus firms would separate from
the global network of member firms
of which Deloitte is a part, they have
concluded that they will not be able
to carry out an audit of the company
given that the majority of its assets
and operations are in Russia.”Stock markets across the world
remain volatile following
Russia’s invasion of Ukraine. Oil
and gas prices have been
spiralling, while British
companies are scrambling to
cope with the effects of soaring
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