BHP (ASX:BHP) share price in focus amid unification proposal

BHP shares are down as the company gets closer to unifying.
The post BHP (ASX:BHP) share price in focus amid unification proposal appeared first on The Motley Fool Australia. –

The BHP Group Ltd (ASX: BHP) share price is in focus as it moves forward with its unification proposal with the BHP Group Plc business in the UK.

On 2 December 2021, BHP announced a final board decision to unify BHP’s corporate structure under its existing Australian parent company, BHP Group Limited. The unification will require the approval of shareholders of both the Australian and UK businesses at meetings that will take place on 20 January 2022.

Today, BHP has published a shareholder circular, a prospectus and a pre-listing announcement for the Johannesburg Stock Exchange.

If all the conditions are satisfied, unification is expected to occur on 31 January 2022.

What are the advantages of the unification?

BHP’s leadership believes that now is an attractive time to unify BHP’s corporate structure as it continues to position its resource portfolio to grow value from commodities that will benefit from global trends like decarbonisation and economic growth.

Having the entire company running through one business will reportedly make BHP simpler and more agile, with the strategic flexibility to shape the portfolio for the future.

One example that BHP gave is that it would enable BHP to undertake certain transactions more simply and efficiently than it can under the current dual listed company structure. That includes the agreement to merge the petroleum business with Woodside Petroleum Limited (ASX: WPL). Future demergers and equity raising transactions would also be simpler to execute.

The business will have the same commitment to “great returns” for shareholders with the same dividend policy for shareholder returns as well as the same ability to distribute fully franked dividends.

How much is this going to cost?

BHP has outlined that the total transaction costs relating to unification are currently estimated to be between US$350 million to $US$450 million (pre-tax) and includes stamp duty, adviser and other fees.

What commodities are BHP focused on?

BHP says that it’s focused on the resources that the world needs to grow and decarbonise.

Its current portfolio includes copper for renewable energy, nickel for electric vehicles, potash for sustainable farming, as well as iron ore and metallurgical coal for the steel needed for global infrastructure and the energy transition.

The latest move by BHP is to invest US$5.7 billion in capital expenditure for the Jansen Stage 1 potash project in the province of Saskatchewan, Canada.

Is the BHP share price good value?

Analysts at Macquarie Group Ltd (ASX: MQG) think that it is, with a buy/outperform rating and a price target of $51. That’s more than 25% than where BHP shares are right now.

Based on dividend estimates, Macquarie reckons that BHP will have a grossed-up dividend yield of 14.4% in FY22 and 10% in FY23.

The post BHP (ASX:BHP) share price in focus amid unification proposal appeared first on The Motley Fool Australia.

Should you invest $1,000 in BHP right now?

Before you consider BHP, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Here’s why ASX 200 mining shares are flying higher

Morgans names 2 high yield ASX dividend shares to buy now

RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?

Could the BHP (ASX:BHP) dividend be set for a boost?

BHP (ASX:BHP) share price struggled on Monday despite acquisition talks ‘progressing’

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!