The BHP Group Ltd (ASX: BHP) share price is losing its grip this morning, slipping to the downside. Today's move follows the Australian Competition and Consumer Commission (ACCC) announcing its verdict on Woodside Petroleum Limited's (ASX: WPL) proposed acquisition of BHP's petroleum business.
In morning trade, the diversified mining giant's shares are fetching $40.66, down 1%. The regulatory green light comes 23 days after the mega-merger was first announced.
Why did the ACCC give Woodside the green light?
Shareholders from both Woodside and BHP are one step closer to an amalgamated future today. Yet, looking at the BHP share price today, you wouldn't think investors are too excited about it.
A media release from the ACCC states the corporate watchdog will not oppose Woodside's proposed acquisition of BHP Petroleum and its oil and gas assets.
According to the release, the regulator carefully considered the potential impacts of the deal. Specifically, the supply of domestic natural gas in Western Australia. This is because the WA market is the only area where the two energy giants overlap. Whereas, all other customers are either offshore or in areas where the two do not coincide.
ACCC chair Rod Sims commented:
We found that post-acquisition, Woodside would continue to face competition from a range of suppliers of domestic gas, including major producers Chevron and Santos, and from several other smaller suppliers including Shell and ExxonMobil. Woodside's share of domestic gas after the acquisition will be approximately 20 percent.
Due to the likely presence of reasonable competition, the Australian regulator has opted to allow the deal to proceed. Despite this development, the BHP share price is weakening as investors digest the news.
As the merger takes another step forward to solidifying, the ASX could soon count Woodside as a top 10 global independent energy company.
How has the BHP share price been tracking?
Investors in BHP have been riding a wave of increased volatility in the BHP share price since August. A cratering iron ore price has dragged the Australian mining company away from its 52-week high by approximately 25%. However, shares in BHP have been rebounding in recent weeks.
At present, the BHP share price is trading at a price-to-earnings (P/E) ratio of 13.2 times. For comparison, the Australian metals and mining industry average P/E ratio is around 15.2 times.
