Can the Western Areas (ASX:WSA) takeover prompt BHP (ASX:BHP) to go nickel shopping?

A takeover battle for Western Areas may only be just heating up as two new potential suitors enter the field.
The post Can the Western Areas (ASX:WSA) takeover prompt BHP (ASX:BHP) to go nickel shopping? appeared first on The Motley Fool Australia. –

The Western Areas Ltd (ASX: WSA) share price is shaping up to be one of the hottest merger and acquisition (M&A) candidates on the ASX.

The potential takeover frenzy was unleashed when IGO Ltd (ASX: IGO) and Western Areas confirmed they were in preliminary merger discussions.

Is BHP next to launch a takeover bid for Western Areas?

The news sparked speculation that BHP Group Ltd (ASX: BHP) could enter the fray. Both Western Areas and IGO are key suppliers to BHP’s Nickel West operations, reported the Australian Financial Review.

BHP’s chief executive Mike Henry has made it known that he has big ambitions when it comes to nickel. He recently signed an agreement with Tesla Inc (NASDAQ: TSLA) to supply nickel to Elon Musk’s electric vehicle (EV) juggernaut.

BHP will need to invest big in Nickel West and the industry is seen as ripe for consolidation thanks to the EV revolution.

IGO could force BHP’s takeover hand

Euroz Hartleys speculated the potential M&A between IGO and Western Areas could force BHP’s hand, reported the AFR. IGO may be looking to give itself commercial leverage when dealing with giant partners like BHP.

Nickel West relies on smaller suppliers like IGO and Western Areas for around 30% of its ore. The quality of the ore from both miners are key to the efficiency of BHP’s nickel smelters. Merging the two smaller miners could give IGO an upper hand in dictating terms.

Three-way takeover battle for Western Areas

But this may soon turn into a three-horse race for Western Areas. The takeover target revealed on Friday that Fortescue Metals Group Limited’s (ASX: FMG) high profile founder Andrew Forrest has entered the fray.

His investment vehicle, Wyloo Consolidated Investment, has gone substantial and taken a 5.3% stake in Western Areas.

Perhaps it’s a bit of payback after BHP outbid him for Canadian nickel miner Noront Resources.

Foolish takeaway

It’s interesting that Twiggy Forrest is such an active player in the M&A scene too. His interest isn’t confined to mining as he went added to his position in Huon Aquaculture Group Ltd (ASX: HUO) following a takeover bid by JDS.  

But not all experts believe that BHP will have to go into the running for Western Areas. They point to comments by Henry that nickel doesn’t need to make up a big part of the miner’s portfolio, as long as BHP becomes an important player in the sector.

Regardless of how the takeover battle for Western Areas pans out, most will agree that we have not seen the last of M&As in the nickel sector.

The post Can the Western Areas (ASX:WSA) takeover prompt BHP (ASX:BHP) to go nickel shopping? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

More reading

After ASX mining shares crashed last week, top brokers are backing this miner

These were the worst performing ASX 200 shares last week

Western Areas (ASX:WSA) share price jumps 10% after Twiggy Forrest buys stake
What’s going on with ASX lithium shares today?

Why Adairs, Redbubble, Treasury Wine, & Western Areas are storming higher

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited, and Independence Group NL. 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 no position in any of the stocks mentioned. 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!