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Appendix 1,2,3 (158.5 KB)

Number:  10/05

BHP Billiton today announced a cash offer of A$7.85 per share for the entire issued capital of WMC Resources Limited ("WMC Resources"), valuing WMC Resources equity at A$9.2 billion (US$7.3 billion).

The Board of WMC Resources has unanimously recommended that WMC Resources shareholders accept the BHP Billiton offer in the absence of a superior proposal and has indicated that the directors will be accepting this offer for their own holdings of WMC Resources shares on that basis.

The offer is A$0.85 per share higher than Xstrata's cash bid of A$7.00¹  per share and in the top half of the valuation range provided by Grant Samuel, WMC Resources' independent expert, in its Target Statement.

BHP Billiton Chief Executive Officer, Chip Goodyear said: "The acquisition of WMC Resources is a further step in BHP Billiton's strategy of developing, operating and maximising the performance of large scale, long-life, low-cost assets. It is an excellent opportunity to build on our existing nickel and copper businesses and bring uranium into our suite of energy products. Furthermore, the acquisition provides additional premium long-term options to satisfy continuing demand growth in China and other high-growth economies.

"BHP Billiton is best placed to maximise the value of WMC Resources' assets. No other potential purchaser brings to this transaction the experience and synergy benefits of already operating in both nickel and copper and the track record of consistent on-time, on-budget major project delivery.

"Our offer price is based on our normal valuation methodology using our standard pricing protocols and reflects WMC Resources' considerable expansion potential.  We expect the acquisition to add material value to BHP Billiton shareholders over the medium to long term," Mr Goodyear said.

Specific benefits to BHP Billiton from this transaction include:

• WMC Resources' nickel business comprises an outstanding set of assets, in terms of operating capability, country risk, scale and environmental standards, which will complement BHP Billiton's existing nickel business.
  The combined business will have a range of operations, products and technologies that will provide a robust and flexible platform for further growth.
  
• BHP Billiton will have operating control of two of the world's four largest copper deposits.  BHP Billiton's track record in developing and operating Escondida, the world's largest copper mine, ideally equips it to maximise the value of the large, long-life Olympic Dam resource base.  Olympic Dam is the world's fourth largest copper resource and one of the world's 10 largest gold deposits.
  
• The acquisition of WMC Resources will establish BHP Billiton as a major producer of uranium with the largest resource base in the world. Uranium is an important energy source in an increasingly energy intensive world. Not only is this valuable on a stand-alone basis but it complements BHP Billiton's existing energy portfolio of oil, gas and coal.
  
• The inclusion of WMC Resources' businesses and opportunities in BHP Billiton's portfolio enhances its options to develop the production necessary to supply raw materials to high growth markets in the decades ahead.
  
• BHP Billiton is best placed to maximise synergies in the nickel and copper businesses, marketing and other corporate functions.  BHP Billiton will eliminate duplicate functions by using the proven systems and processes that were successfully used following the BHP Billiton merger in 2001.  The annual corporate cost efficiencies are estimated to total A$115 million
  (US$91 million), with a one-time cost of A$120 million (US$95 million).

Commenting on the attractiveness of the offer to WMC Resources' shareholders, WMC Resources CEO Andrew Michelmore said: "This offer supports the view of the value of WMC Resources that the Board has consistently held.  We will be working with BHP Billiton to ensure that this recommended offer is put to shareholders as soon as possible".

The offer will be made through a subsidiary by way of an off-market takeover bid under the Australian Corporations Act 2001 and will be funded from both new and existing debt facilities.  BHP Billiton remains committed to an A credit rating and will retain financial flexibility following the acquisition.  Following the acquisition, on a pro forma basis, BHP Billiton's net debt, as at 30 June 2005 is estimated to total US$12.4 billion with corresponding net gearing of 42 percent².   The acquisition is expected to be earnings accretive in the financial year ending 30 June 2006.

The offer is subject to a number of conditions including BHP Billiton receiving necessary regulatory approvals and acquiring at least 90% of the number of WMC Resources ordinary shares on issue.  The conditions are outlined in full in Appendix 1 to this release.

BHP Billiton holds economic exposure to 50.6 million WMC Resources shares (4.3% of the issued share capital) through cash settled derivative contracts.

WMC Resources has entered into a Deed of Undertaking with BHP Billiton in relation to BHP Billiton's offer.  This includes a break-fee of A$92 million (US$73 million) payable to BHP Billiton in certain circumstances, including a successful competing takeover proposal.  WMC Resources will provide full details of the Deed.

BHP Billiton's Bidder's Statement is expected to be lodged shortly and to be dispatched to WMC Resources shareholders in approximately three weeks.  

Further information on WMC Resources can be found in Appendix 2 and on its Internet site: www.wmc.com.  Further information on BHP Billiton can be found in Appendix 3 and on our Internet site: www.bhpbilliton.com.

¹ The value of Xstrata’s offer has been reduced to A$7.00 per share, reflecting the A$0.20 per share dividend to be paid to WMC Resources shareholders on 11 March.

² Net gearing is defined as net debt to net debt plus equity.

For further information please contact:

Australia
Jane Belcher, Investor Relations
Tel: +61 3 9609 3952
Mobile: +61 417 031 653
email: Jane.H.Belcher@bhpbilliton.com

Tania Price, Media Relations
Tel: +61 3 9609 3815
Mobile: +61 419 152 780
email: Tania.Price@bhpbilliton.com

United Kingdom
Mark Lidiard, Investor & Media Relations
Tel: +44 20 7802 4156
Mobile: + 44 7769 934 942
email: Mark.Lidiard@bhpbilliton.com

Ariane Gentil, Media Relations
Tel: +44 20 7802 4177
Mobile: +44 7881 518 715
email: Ariane.Gentil@bhpbilliton.com

United States
Francis McAllister, Investor Relations
Tel: +1 713 961 8625
Mobile: +1 713 480 3699
email: Francis.R.McAllister@bhpbilliton.com

South Africa
Michael Campbell, Investor & Media Relations
Tel: +27 11 376 3360
Mobile: +27 82 458 2587
email: Michael.J.Campbell@bhpbilliton.com

Further Information

In connection with the planned public tender offer (the "Tender Offer") by a wholly owned subsidiary of BHP Billiton (the "Company"), for all of WMC Resources' outstanding stock, BHP Billiton will file with the United States Securities and Exchange Commission (the "SEC") an informational document under cover of Form CB.  Investors and holders of WMC Resources securities are strongly advised to read the informational document (when available) and any other relevant documents filed with the SEC, as well as any amendments and supplements to those documents, because they will contain important information.  Investors and holders of WMC Resources securities may obtain free copies of the informational document (when available), as well as other relevant documents filed with the SEC, at the SEC's website at www.sec.gov and will receive information at an appropriate time on how to obtain transaction-related documents for free from the Company or its duly designated agent.

This communication is for information purposes only.  It shall not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities of WMC Resources.  The distribution of this communication may, in some countries, be restricted by law or regulation.  Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions.  

Forward-Looking Statements

Statements contained in this communication may contain forward-looking statements with respect to BHP Billiton's financial condition, results of operations, business strategies, operating efficiencies, competitive position, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters.  Statements in these materials that are not historical facts are "forward-looking statements".

These forward-looking statements, including, among others, those relating to the future business prospects, revenues and income of BHP Billiton, wherever they may occur in this communication are necessarily estimates reflecting the best judgment of the senior management of BHP Billiton and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.  As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this communication and BHP Billiton's Annual Report on Form 20-F for the financial year ended 30 June 2004.  

Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: the success of the proposed Tender Offer; estimated reserves; plans, strategies and objectives of management; closure or divestment of certain operations or facilities (including associated costs); anticipated production or construction commencement dates; expected costs or production output; the anticipated productive lives of projects, mines and facilities; and provisions and contingent liabilities.  

BHP Billiton undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of the materials in which such statements are contained or to reflect the occurrence of unanticipated events.