Does Hardie’s US aspiration open door for Woodside to follow?

Australian-listed industrial stocks see merit in concentrating on the US where there’s stronger opportunities for expansion. Picture: Wall Stree Journal

James Hardie’s move to a primary listing in the United States has revived the debate about where the future lies for a number of Australian stocks, including the country’s oil and gas champion, the $44bn Woodside Energy.

There’s a view around the market that James Hardie’s $14bn buyout offer for Chicago-based Azek was motivated by its desire to have its main stock exchange listing in the US, where it generates about three quarters of its sales and where it sees growth opportunities.

It came just months after Amcor made a shift to the US with its $13bn acquisition of Berry Global Group in December.

But market experts say they are not the only ones.

Next could be steel manufacturer BlueScope, which derives the bulk of its earnings out of the US, scrap metals company Sims, primarily a group where most of its earnings are US based and defence ship builder Austal, which also counts the US as its main revenue earner.

Australian-listed industrial stocks, in particular, see the merits of concentrating more on the US where there’s stronger opportunities for expansion, a more friendly political regime for manufacturing and cheaper energy costs.

But perhaps one of the more contentious movers could be Woodside, which has been expanding in the US market with acquisitions.

The talk of Woodside comes as speculation continues to surface about buyout interest from major US energy players, including ConocoPhillips and Chevron.

That’s at a time when British energy giant BP was also said to be taking a look.

The understanding is that the three have been eyeing up Woodside in the past year, but none has embarked on any serious work for a buyout yet as there are risks that a deal would be blocked by the Australian government.

The government did just that years back when Shell tried to buy Woodside.

But at that time, Woodside was strongly opposed to the proposal.

This time if it were a friendly deal with the Meg O’Neill-led Woodside, it could be a different story.

The company in recent years has faced opposition from anti-fossil-fuel activists in Australia, and some of its shareholders have been vocal about their opposition of producing oil and gas as climate change concerns dominate the ESG (environmental, social, and governance) agenda.

Yet perhaps one way that Woodside could distance itself from the Australian market – should it opt to do so – to focus on more US-related opportunities could be in a way similar to James Hardie’s latest deal.

This could be where it involved itself in an acquisition or merger of a US group, which could be a way it could justify a listing in the US as its primary listing and eventually distance itself from the Australian market.

The discussion coincides with a growing frustration among company directors and management teams over the onerous ASX rules for corporate governance and the power of proxy advisers.

However, the ASX has been making efforts to address the lack of companies listing by way of initial public offerings and other company concerns.

In Australia the market favours the rights of retail investors to the detriment of institutional investors is one argument, and disclosure elements are considered to be at times onerous.

Corporate directors and management teams are also more generously remunerated in the US.

However, on the flip side, Australian companies’ reporting requirements are less time consuming due to half-yearly reporting requirements as opposed to quarterly requirements in the US.

On the one hand, the fact that groups want to move to the United States shows that they have been successful Australian growth stories.

But that has been less of the case in recent years, with the ASX requirements for smaller businesses making it too costly to seek a public listing here.

Also playing into the demise in publicly listed groups in Australia is the rise of the private investment market and passive index funds.