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Wednesday March 09, 08:41
BHP needs approval to buy WMC
(by Olivia Cohen)

BHP needs approval to buy WMC BHP Billiton, Anglo-Australian mining company, will not be able to buy Australian miner WMC Resources Ltd before it can receive federal approval as BHP cannot be considered an Australian company.

BHP offered 9.2 billion Australian dollars (US$7.3 billion; euro5.5 billion) in cash for WMC on Tuesday. It exceeds the bid of 8.2 billion Australian dollars (US$6.5 billion; euro4.9 billion) made by Swiss-based Xstrata.

But the company needs to receive federal approval to get WMC, said Treasurer Peter Costello. Despite having headquarters in Melbourne, Australia, BHP is legally a foreign company and cannot overcome the government’s restrictions. "We would like to see new investment and a lift in the capacity of that mine subject to all Australia’s nuclear safeguards, the possibility to increase exports and to earn more income for Australia," Mr. Costello added.

BHP says its offer is much more attractive than the bid from Xstrata. "They have enormous flexibility through free operating cash flow and in their capital structure at the moment to support a higher bid should they feel it is justified," said S&P’s primary BHP credit analyst Peter Stephens.
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