SYDNEY Miner BHP Billiton's acquisition strategy was back in the spotlight on Friday as market talk resurfaced that it was looking at a $40 billion-plus bid for Anadarko Petroleum Plc, although banking sources said they were unaware of any imminent offer.
The Anglo-Australian miner, under pressure to land a big deal after scrapping a $39 billion bid for Canada's Potash Corp in November, declined to comment on the rumors which drove Anadarko's shares to a 2-1/2-year high at one point in New York Stock Exchange trading on Friday.
Fund managers and analysts said Anadarko was a good strategic fit for BHP, which is sitting on a pile of cash and needs to expand. Speculation that BHP Chief Executive Marius Kloppers was eyeing Anadarko first surfaced in September, as the U.S. oil company's shares slowly rebounded after BP Plc's Gulf of Mexico oil spill sent them tumbling.
Anadarko owns 25 percent of the ruptured Macondo well that BP operated.
An unsourced report in Britain's Daily Mail newspaper on Thursday said BHP may offer $90 per share for Anadarko, propelling the miner's growth strategy back into the headlines during holiday trade.
Anadarko would dovetail with BHP's current strategy in the deepwater Gulf of Mexico. Before the BP disaster disrupted activity there, Anadarko had three deepwater rigs contracted to work in the region, while BHP had two.
"The portfolio of exploration and assets in Anadarko would be appealing to BHP and the stock has probably suffered in terms of fallout from the BP situation in the Gulf of Mexico, so it might be an opportune time for BHP to make a step change in terms of that portfolio," said Tim Schroeders, portfolio manager at Pengana Capital.
One source familiar with BHP's thinking, but not directly working with the company, downplayed the Daily Mail report as unreliable. A spokesman for Anadarko said it was company policy not to comment on speculation.
Some analysts said the $90-per-share figure would not be enough to land a deal.
"While we believe speculation of a bid at this level is supportive it is not likely credible in our view: the price is simply too low," Bank of America Merrill Lynch analysts said, pointing to Anadarko's base case value of $110 per share which did not factor in recent oil price rises and exploration successes.
On Friday, Anadarko shares surged at one point to $78.98, near the all-time closing high of $79.86 set in June 2008. The stock eventually closed up 0.7 percent at $76.16 on the New York Stock Exchange.
BHP shares ended down 1.3 percent on Friday.
Anadarko, which has a huge portfolio of deepwater oil and gas discoveries, and Australia's Woodside Petroleum have been touted as potential targets for BHP since its Potash bid was killed in November.
Investors said BHP has grown so big in mining, takeover attempts would run into regulatory opposition, and the oil and gas sector, where it is relatively small, was the easiest path for the company to go.
Woodside has also been cited as a potential target since Royal Dutch Shell sold its stake in November.
"It is far from a done deal obviously but there is probably a higher probability of BHP buying Anadarko than Woodside," said Schroeders of Pengana Capital.
An investment banker who has previously worked with BHP said the miner traditionally surprised the market by bidding for a target which had not been the subject of long-running speculation.
However, fund managers and analysts said a BHP acquisition of Anadarko made sense for the miner.
"They have a lot of good assets around the world, they would be a good buy for someone," said Mike Breard, an oil analyst with Hodges Capital Management in Dallas, adding that Anadarko's future liability for the Gulf spill was still a big unknown.
"It's not new but for whatever reason it's finding traction again this morning," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
After the spill, Anadarko shares slid to a low of $34.54 as investors worried over its liability in the disaster that left 11 workers dead and caused the worst U.S. offshore oil spill.
(Additional reporting by Anna Driver in Houston, Braden Reddall in San Francisco and Ernest Scheyder in New York; Editing by Balazs Koranyi, Anshuman Daga and Bernard Orr)