BHP is known as Broken Hill Proprietary Company and was established in 1885 and its works in three major sectors which are: mineral, petroleum and steel along with that it also works in some other field like transport and logistics, corporate services, strategy and legal .Mainly they were involved in discovery, development, production and marketing of iron ore, copper, oil and gas. Its main headquarter was in Melbourne and gave employment to 30000 individual.
Billiton was formed in 1860 in Netherlands and it is named after the name of tin-rich Island in Indonesia, where they first started mining. In 1997, they join the FTSE 100 index(London stock exchange ) .Before merging this company leads in mining and metal also in manganese, steaming coal, nickel and titanium minerals. Some of the major market conditions before the merging were:
-Global capital markets were increasingly selective, as national and trading exchange limitations become less relevant, shareholders demand enhanced returns
- Clients consolidating and have become much more efficient themselves
- Workforce learn that gradually more a "suite" of skills is essential for promotion and job security
- Doubtful economic situation with most of the major economies of the world
- Facing a period of slow, or no, growth
BHP and Billiton merge together in 2001 and form dual listed company .The merger was beneficial for both and increase the value of company from a market capitalization of $28b in 2001 to one of $42b in 2003.
With this new form company BHP Billiton could now offer integrated, global, industrial minerals solutions to customers as it could now operate two major centres as well as provide an extensive array of services. BHP Billiton would become the world’s third largest producer of copper, the Western world’s third largest producer of aluminium, the world’s largest integrated producer of manganese/chrome/ferrous alloys, the world’s third largest iron ore producer, and the world’s largest producer of export steaming coal and hard coking coal. The combined firm would also have significant oil, gas, and liquid natural gas holdings as well as significant titanium holdings. Billiton also brought to the table expertise in biotech processes for minerals processing with its Bio Cop technology, a technology that could more efficiently process copper than the existing smelting process.
There were many benefits to both companies because of the merging which are as follows:
1. Diversification of combined company’s portfolio would be the reduced reliance on exchange – traded commodities and oil prices like earlier rate of items depend on others availability of product .Now reliance on other product is greatly reduced.
2. Industry roll ups – inherent cost saving and enhanced revenue generation, reduction of corporate offices and less tangible items.
3. Company assets highly chosen towards mineral and petroleum .this move was positive for both as it would allow them to...