for those interested in wmc resources or bhp

For those interested in WMC Resources or BHP



LOOKS LIKE GAME SET AND MATCH TO BHP with the news this morning that they have 42.81% of WMC Resources plus a 4.31% beneficial interest through derivatives. That makes 47.12%. They are just a share or two (33m shares actually) away from getting the 50.1% they need to declare the bid for WMR unconditional.



It is almost certain that by 7.30pm tonight they will have what they need. This means a few things:



· The bid will be declared unconditional.

· The bid will be extended two weeks until the 17th June.

· No one else is going to bid now, forget that idea.

· BHP will start to pay cash to accepting shareholders from tonight.

· At the 50% acceptance level that means BHP will be handing around $4.6bn of cash to WMR shareholders immediately (up to $9.2bn as they move towards 100%).

· This cash will be reinvested in the market…..mostly in resources and mostly in BHP. Obviously good news for BHP, resources and the market.

· BHP should continue to rally today.

· One theory is that the cash will return to the hedge funds (about 40% of WMR was with hedge funds or $3.7bn).These funds will look for another trade….one of the stocks that lost focus as a takeover stock when WMR was bid for was Newcrest Mining. Newcrest have just had a profits warning saying Telfer would ramp up slower than expected. Most brokers downgraded to a HOLD recently. Some saw the fall in the share price as a buying opportunity. As WMR disappears the expectation is that the bid premium will return to NCM.



As a WMR shareholder that hasn’t accepted you now have a choice:



· Accept and take 785c cash.

· Don’t accept and hope that that the bid gets extended again before the 17th June by another two weeks. That would take you to the 1st July, the new tax year….in which cash you would defer paying tax on the WMR capital gain by 1 year, which would be nice.



What to do….as a mum and dad investor your acceptance is probably not going to tip the balance today….so you might was well hold on and gauge things ahead of the next expiry on June 17th. BHP may make some declaration before then about not extending again…or otherwise. You might as well wait until there is some certainty on that. Keep your options open until you know more. See if there is a chance the expiry date will be pushed into next year.



It looks unlikely….but if you are concerned about deferring the capital gain….you might as wait until the last moment to find out

Re: Marcus Report