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Elliott increases pressure on BHP to ditch petroleum

Reuters  |  SYDNEY/LONDON 

By James Regan and Barbara Lewis

SYDNEY/(Reuters) - Activist investor Management raised the pressure for strategic changes at on Tuesday, calling for an independent review of the mining giant's petroleum business.

Elliott, which has built up a 4.1 percent stake in BHP's London-listed arm and is urging changes to boost shareholder value, said there were clear signs the market was receptive to a new strategy for

"There is extremely broad and deep-rooted support for pro-active steps to be taken by management to achieve an optimal value outcome for BHP's petroleum business following a formal open review," it said in letter to management.

Elliott, founded by billionaire Paul Singer, has been pushing for to collapse its dual-listed structure, spin off its U.S. oil and gas assets, and boost returns to shareholders since publishing its proposals on April 10 - all of which has rejected.

Its latest letter, which did not name any other shareholders, was released hours before Chief Executive Andrew Mackenzie spoke at a Bank of America Merrill Lynch mining conference in Barcelona that is also being attended by

said it was disappointed believed the company was not open to suggestions and dismissed criticism that it had been misleading in its response to the New York-based investor's calls for a change in strategy.

"We reject both claims," the miner said in an emailed statement, adding that it would review Elliott's latest material in full and formally respond.

Speaking at the Barcelona conference, which is attended by bankers and investors, Mackenzie said had made consistent progress and was confident it could grow the value of the company by up to 50 percent and almost double the return on capital.

"Our path is deliberate, with value and returns at the centre of everything we do," Mackenzie said in a copy of his speech.

He said BHP's petroleum exploration programme had a value of more than $20 billion and close to a quarter of this was in low-to-medium risk prospects to be tested in the next two years.

Mackenzie has previously said it is the wrong time for to sell its U.S. petroleum assets, given oil prices are still relatively low at about $52 per barrel.

has also sought to highlight the action it is taking to divest non-core parts of its U.S. shale assets.

MEETING IN BARCELONA

A source close to said the company expected to meet in Barcelona.

Analysts at Deutsche Bank and Citi have said could unleash billions of dollars by selling part or all of its petroleum business, although Citi cautioned this would bring only a one-off benefit to shareholders and the company should focus on how to grow value for investors.

"The current period of shareholder activism could result in a break-up and/or a significant alteration of the company's structure," Citi said in a note this week.

Responding to concerns raised by the Australian government, on Tuesday backtracked on its proposal for to have its main listing in London, saying that it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and bourses.

An example would be International Consolidated Airline Group, which resulted from the 2010 merger of British Airways and Iberia. IAG has its primary listing in Spain but also trades in and remains part of the benchmark FTSE 100 index.

has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.

Its share price has fallen since launched its attack in April and the stock is down nearly 9 percent since the start of the year. By 0730 GMT on Tuesday, was down 0.2 percent.

On its website, fixingbhp.com, also criticised BHP's track record on share buybacks and suggested the company make a $6 billion buyback in 2018.

Such a buyback, if the current valuation remained unchanged, would lead to $2.4 billion in value accretion, equivalent to more than 12 times Elliott's expected costs of unifying BHP's dual listings, it said.

has put the cost of unification at $200 million and said BHP's $1.3 billion estimated cost was "flawed and misleading".

(Reporting by James Regan; Additional reporting by Jamie Freed and Sonali Paul; Editing by Richard Pullin and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Elliott increases pressure on BHP to ditch petroleum

SYDNEY/LONDON (Reuters) - Activist investor Elliott Management raised the pressure for strategic changes at BHP on Tuesday, calling for an independent review of the mining giant's petroleum business.

By James Regan and Barbara Lewis

SYDNEY/(Reuters) - Activist investor Management raised the pressure for strategic changes at on Tuesday, calling for an independent review of the mining giant's petroleum business.

Elliott, which has built up a 4.1 percent stake in BHP's London-listed arm and is urging changes to boost shareholder value, said there were clear signs the market was receptive to a new strategy for

"There is extremely broad and deep-rooted support for pro-active steps to be taken by management to achieve an optimal value outcome for BHP's petroleum business following a formal open review," it said in letter to management.

Elliott, founded by billionaire Paul Singer, has been pushing for to collapse its dual-listed structure, spin off its U.S. oil and gas assets, and boost returns to shareholders since publishing its proposals on April 10 - all of which has rejected.

Its latest letter, which did not name any other shareholders, was released hours before Chief Executive Andrew Mackenzie spoke at a Bank of America Merrill Lynch mining conference in Barcelona that is also being attended by

said it was disappointed believed the company was not open to suggestions and dismissed criticism that it had been misleading in its response to the New York-based investor's calls for a change in strategy.

"We reject both claims," the miner said in an emailed statement, adding that it would review Elliott's latest material in full and formally respond.

Speaking at the Barcelona conference, which is attended by bankers and investors, Mackenzie said had made consistent progress and was confident it could grow the value of the company by up to 50 percent and almost double the return on capital.

"Our path is deliberate, with value and returns at the centre of everything we do," Mackenzie said in a copy of his speech.

He said BHP's petroleum exploration programme had a value of more than $20 billion and close to a quarter of this was in low-to-medium risk prospects to be tested in the next two years.

Mackenzie has previously said it is the wrong time for to sell its U.S. petroleum assets, given oil prices are still relatively low at about $52 per barrel.

has also sought to highlight the action it is taking to divest non-core parts of its U.S. shale assets.

MEETING IN BARCELONA

A source close to said the company expected to meet in Barcelona.

Analysts at Deutsche Bank and Citi have said could unleash billions of dollars by selling part or all of its petroleum business, although Citi cautioned this would bring only a one-off benefit to shareholders and the company should focus on how to grow value for investors.

"The current period of shareholder activism could result in a break-up and/or a significant alteration of the company's structure," Citi said in a note this week.

Responding to concerns raised by the Australian government, on Tuesday backtracked on its proposal for to have its main listing in London, saying that it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and bourses.

An example would be International Consolidated Airline Group, which resulted from the 2010 merger of British Airways and Iberia. IAG has its primary listing in Spain but also trades in and remains part of the benchmark FTSE 100 index.

has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.

Its share price has fallen since launched its attack in April and the stock is down nearly 9 percent since the start of the year. By 0730 GMT on Tuesday, was down 0.2 percent.

On its website, fixingbhp.com, also criticised BHP's track record on share buybacks and suggested the company make a $6 billion buyback in 2018.

Such a buyback, if the current valuation remained unchanged, would lead to $2.4 billion in value accretion, equivalent to more than 12 times Elliott's expected costs of unifying BHP's dual listings, it said.

has put the cost of unification at $200 million and said BHP's $1.3 billion estimated cost was "flawed and misleading".

(Reporting by James Regan; Additional reporting by Jamie Freed and Sonali Paul; Editing by Richard Pullin and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Elliott increases pressure on BHP to ditch petroleum

By James Regan and Barbara Lewis

SYDNEY/(Reuters) - Activist investor Management raised the pressure for strategic changes at on Tuesday, calling for an independent review of the mining giant's petroleum business.

Elliott, which has built up a 4.1 percent stake in BHP's London-listed arm and is urging changes to boost shareholder value, said there were clear signs the market was receptive to a new strategy for

"There is extremely broad and deep-rooted support for pro-active steps to be taken by management to achieve an optimal value outcome for BHP's petroleum business following a formal open review," it said in letter to management.

Elliott, founded by billionaire Paul Singer, has been pushing for to collapse its dual-listed structure, spin off its U.S. oil and gas assets, and boost returns to shareholders since publishing its proposals on April 10 - all of which has rejected.

Its latest letter, which did not name any other shareholders, was released hours before Chief Executive Andrew Mackenzie spoke at a Bank of America Merrill Lynch mining conference in Barcelona that is also being attended by

said it was disappointed believed the company was not open to suggestions and dismissed criticism that it had been misleading in its response to the New York-based investor's calls for a change in strategy.

"We reject both claims," the miner said in an emailed statement, adding that it would review Elliott's latest material in full and formally respond.

Speaking at the Barcelona conference, which is attended by bankers and investors, Mackenzie said had made consistent progress and was confident it could grow the value of the company by up to 50 percent and almost double the return on capital.

"Our path is deliberate, with value and returns at the centre of everything we do," Mackenzie said in a copy of his speech.

He said BHP's petroleum exploration programme had a value of more than $20 billion and close to a quarter of this was in low-to-medium risk prospects to be tested in the next two years.

Mackenzie has previously said it is the wrong time for to sell its U.S. petroleum assets, given oil prices are still relatively low at about $52 per barrel.

has also sought to highlight the action it is taking to divest non-core parts of its U.S. shale assets.

MEETING IN BARCELONA

A source close to said the company expected to meet in Barcelona.

Analysts at Deutsche Bank and Citi have said could unleash billions of dollars by selling part or all of its petroleum business, although Citi cautioned this would bring only a one-off benefit to shareholders and the company should focus on how to grow value for investors.

"The current period of shareholder activism could result in a break-up and/or a significant alteration of the company's structure," Citi said in a note this week.

Responding to concerns raised by the Australian government, on Tuesday backtracked on its proposal for to have its main listing in London, saying that it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and bourses.

An example would be International Consolidated Airline Group, which resulted from the 2010 merger of British Airways and Iberia. IAG has its primary listing in Spain but also trades in and remains part of the benchmark FTSE 100 index.

has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.

Its share price has fallen since launched its attack in April and the stock is down nearly 9 percent since the start of the year. By 0730 GMT on Tuesday, was down 0.2 percent.

On its website, fixingbhp.com, also criticised BHP's track record on share buybacks and suggested the company make a $6 billion buyback in 2018.

Such a buyback, if the current valuation remained unchanged, would lead to $2.4 billion in value accretion, equivalent to more than 12 times Elliott's expected costs of unifying BHP's dual listings, it said.

has put the cost of unification at $200 million and said BHP's $1.3 billion estimated cost was "flawed and misleading".

(Reporting by James Regan; Additional reporting by Jamie Freed and Sonali Paul; Editing by Richard Pullin and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22