WMC shareholders shun BHP bid

ANGLO-Australian mining giant BHP Billiton is expected to sweeten its A$9.2bn (£4bn) offer for nickel and uranium producer WMC Resources as shareholders shun the bid.

BHP has so far secured less than 8% of WMC shares in the 10 weeks since it swept London-listed Xstrata from the field and apparently won the fight for WMC.

At the very least, BHP is almost certain to extend the offer a second time beyond the 6 June deadline, and many analysts believe the company will use the extension to raise the all-cash bid of $7.85 a share, possibly by adding paper to the mix.

The bid was received with enthusiasm at the time it was made, and was seen as a much superior offer to Xstrata's, which had been vilified in Australia on jingoistic grounds.

BHP Billiton has been forced to introduce a special conditional acceptance facility, which allows investors to signal their intention to accept the offer without actually accepting until the bid is declared unconditional.

According to Australian sources, BHP has won acceptances representing just 3.5% of WMC shares and has another 4.3% through a swap deal with Deutsche Bank.

The company has also been forced to call an extraordinary general meeting to overcome a breach of the Australia Companies Act.

BHP discovered that a third dividend it declared last year infringed provisions that forbid a company from making distributions that exceed profits reported in the previous year's accounts.

The three dividends in 2004 took payments to US$641m (£340.2m), $38m more than its distributable profits.

BHP Billiton says its legal advice suggested the matter could be resolved by the passing of a resolution at an extraordinary general meeting, set for 13 June.

Meanwhile, Xstrata's parent, Glencore of Switzerland, is back in the news with a potential bid for control of another Aussie mining asset. But the chief executive of the Swiss commodities trader, which owns 40% of Xstrata, played down talk it may be interested in taking over Australian nickel producer Minara Resources, in which the group already has a 49.4% interest.

Minara 'is making money, so we are happy with that investment', Ivan Glasenberg told reporters. Minara's 60%-owned Murrin Murrin mine in Western Australia is 'starting to return cash to the shareholders and generating profits', Glasenberg said after Minara's annual meeting in Perth.

'Hopefully, it will overcome all of its technical problems and is a good performing asset.'