Is BHP holding a smoking gun?

There has been so much activity on the Australian share market over the last week it seems unfair to single out just one event.

It all started with the end of quarter “window dressing” period.

During this time the market ran strongly on light volume, led by the blue chip stocks.

It’s not uncommon during this period to see the market move higher, as fund managers’ performances are measured and performance fees are paid on end of quarter numbers.

What was interesting was that the recent run all but wiped out the losses in the market during the Japanese earthquake/tsunami with the index bouncing back to above where it was pre-disaster.

Speculation that BHP-Billiton was preparing to bid for Woodside Petroleum has been at the forefront during this time and is now entering its third week.

Initially we saw the ‘short the predator, long the prey’ response from funds managers, with BHP trading in the $44 to $45 range and Woodside breaking out to the upside as it pushed above $48 for the first time since April 2010.

More recently, we have seen BHP lose the ‘predator”’ discount and the stock was trading above $47 on Monday.

When it comes to takeover rumours like this the adage of where there is smoke there is fire is quite often true. In this case there has been a little too much smoke for there to be no fire, so we’re watching this space with interest.

It’s also important to note that Woodside is still without a chief executive since the imminent departure of Don Voelte, so the market is eagerly awaiting any announcement on this from Woodside chairman Michael Chaney.

After a raft of Chinese takeovers in the iron ore sector over the past couple of years it now appears it’s the copper sectors turn.

At the weekend, China’s Minmetals Resources made a US$6.5bn cash takeover offer for Equinox Minerals (ASX Code: ASX).

Equinox is listed on the ASX but has its main copper mine in Zambia.

Complicating matters, Equinox is currently in the process of bidding for Canadian listed copper miner Lundin Mining Corp.

With copper prices currently at all time highs, this bid has given other copper miners on the ASX a push, led by Oz Minerals (ASX Code: OZL) and PanAust Limited (ASX Code: PNA).

Finally, Woolworths managing director Michael Luscombe said he would step down from the role he has held for five years at the end of September.

His role will be filled internally by current Woolworths chief operating officer Grant O’Brien.

It’s been a tough five years for Mr Luscombe, having led the company through the GFC and more recently head-to-head against resurgent super market rival Coles (a business of Wesfarmers).

Mr Luscombe will walk away with his head held high having set the platform for the diversification of Woolworths into the hardware market.

Information contained in this article does not consider your personal circumstances. You should consult a stockbroking professional before making any investment decisions. Sentinel may hold positions in stocks discussed from time to time.