BHP is back in the M&A game.
A little more than three months after BHP withdrew its hostile $38.6-billion bid for Potash - after Ottawa made it clear it wasn't going to fly - the world's biggest mining company has made a successful $4.75-billion play for Chesapeake Energy Corp.'s stake in the Fayetteville shale. The deal, which was announced over the weekend, came together in less than two months.
"It's always nice when you find another pretty girl very quickly after being rejected by the last one," says Adam Waterous, head of global investment banking at Scotia Capital, and head of Scotia Waterous, the bank's energy advisory arm. It advised BHP on this deal along with Barclays.
BHP, Mr. Waterous explains, knows what it's looking for. The company wants low-cost, large, expandable resources and it had drawn up a list of candidates that met its criteria. It whittled that list down to a handful of targets that were realistic and made sense.
"Lots of the time you can figure out who the pretty girls are, but sometimes the pretty girls don't want to dance with you," says Mr. Waterous. "So what you really have to figure out is who looks attractive but conversely who is still going to want to dance with you."
Chesapeake was open to invitations because it wanted to pay down debt.
Mr. Waterous predicts this deal is the first of many for BHP. "You don't want to just stop with a single asset, I'm sure that they will continue to be open to further acquisition opportunities because shale gas fits with the strategy of large low-cost expandable assets."
And it goes without saying that Scotia Capital will do what it can to pitch those opportunities to the mining giant. Mr. Waterous can't help bragging about the three deals that his team has done in the last five months, collectively advising buyers on more than $14-billion worth of transactions, none of which involved a Canadian company (the other two deals were Sinopec's $7-billion purchase of a 40 per cent stake in Repsol's business in Brazil, and Sinopec's $2.45-billion acquisition of Occidental's assets in Argentina).
"It is unheard of to have a Canadian advising on buyside transactions outside of the country," Mr. Waterous says. "So I'd be disingenuous if I didn't say we were very proud of that accomplishment which really hasn't happened in Canadian investment banking history."