Will ASX do its job after BHP’s disclosure fail?

BHP was grossly misleading when it announced to the market on Monday that it was only evaluating its options but then the following day unveiled a $40bn oil and gas merger with Woodside.

BHP this week agreed to a $40bn merger of its petroleum assets with Woodside.

The ASX – and ASIC – must haul Woodside and especially BHP over the coals for their statements Monday that effectively denied the merger which they announced in detail on Tuesday.

Late Sunday The Australian newspaper broke the story that BHP and Woodside had sealed the $40bn oil and gas merger and it would be announced this week.

Monday morning BHP issued a statement which deliberately and specifically downplayed the prospect of a deal and especially a pending one.

It said BHP “regularly reviews its portfolio of assets”. It confirmed it had “initiated a strategic review of our petroleum business”.

It went on: “a number of options are (my stress on the present tense) being evaluated”.

“One (again my stress) option” is a “potential” merger with Woodside.

While BHP confirmed that discussions between the parties “are currently progressing”, no agreement “has been reached” on any “such transaction”.

That statement in both overall tenor and specificity is utterly incompatible with the detailed merger statement that was issued the next day Tuesday.

BHP this week agreed to a $40bn merger of its petroleum assets with Woodside.

This was effectively not only a very detailed agreement, but a “done deal” in the ordinary sense of the term, subject only to the necessary approvals and processes. BHP’s statement was at least grossly misleading and in my judgment constructively false. Do I have to spell it out to especially the ASX?

Well, on past pathetic performance by the body supposedly charged with maintaining a fully and timely informed market, to answer my own question, yes, I do.

BHP stated Monday that the merger was just one of a number of options “being evaluated”; being evaluated as of Monday morning.

The discussions were “currently progressing”. Only “progressing”?

“No agreement” has been reached? Are you kidding me? In some inane corner of the legal advice miasma, you might be able to claim that; unless and until all the signatures on all the documents had been executed, then “no agreement has been reached”.

But in reality? Such that the totality of a very complex and detailed agreement could be announced the following day? Are you kidding me? Indeed, the statement issued by Woodside just half-an-hour after BHP on Monday morning, while considerably less than satisfactory, did also rather effectively expose the extent of BHP’s misleading. Woodside kept its statement brief. It noted the speculation. It disclosed discussions with BHP over a potential merger. It said they were ongoing. It promised to update the market in accordance with its disclosure obligations.

The Woodside statement was also constructively misleading, but at least Woodside did not actively seek to suggest as BHP did that it was all rather vague and uncertain.

Yes, both companies would have been less than happy with the speculation and indeed The Australian’s specific disclosure that a deal had been agreed and would be announced.

Both companies clearly intended to announce it around their respective profit announcements, kicking off with the BHP blockbuster on Tuesday and Woodside’s on Wednesday.

But that does not excuse, far less justify what they – and especially BHP – did on Monday. Let me explain to both companies what they should have done. Once pinged, they should have come clean. Issue a simple joint statement, confirming the planned merger, subject to any formal finalisations, and that detailed statements were expected to be made on Tuesday.

This goes to the broader and absolutely fundamental issues of corporate disclosure which too many corporates and even more depressingly both ASX and the supposed corporate cop ASIC are completely incapable of understanding.

Rather than seek to keep shareholders and the market fully and timely informed, disclosure obligations are assessed in the narrowest and most legalistic terms possible.

Or to put it another way, as I did in a column last week treat shareholders as mushrooms, keep them in the dark and feed them shite.

Originally published as Will ASX do its job after BHP’s disclosure fail?