BHP to return $10.4 billion in buyback, special dividend bonanza

(Reuters) - Top global miner BHP on Thursday said it would buy back shares and pay a special dividend to return $10.4 billion to shareholders, sticking to a promise to hand back all of the proceeds from the sale of its U.S. shale business.

Investors cheered the massive return and the split between a $5.2 billion off-market buyback and a $5.2 billion special dividend, sending BHP's Australian shares up as much as 6.2 percent.

BHP had promised to return all of the net proceeds from the $10.5 billion sale of its U.S. shale business to shareholders when the deal was announced in July. British oil major BP Plc bought most of the business in a deal completed this week.

"It's good that 100 percent is going back to shareholders," said Stephen Butel, an analyst with Platypus Asset Management, which owns shares in BHP.

Miners have been handing money back to investors following a recovery from the commodity bust of 2015-16, under pressure from investors not to waste growing piles of cash on buying up assets that may never deliver returns.

"Giving $10 billion back shows you they probably don't see opportunities to deploy a huge amount of capital internally at the moment," Butel said.

"The whole industry's probably learned from the previous boom and would be quite hesitant to go out and do a large acquisition."

Bidding into the off-market buyback will open on Nov. 19 and close on Dec 14. BHP said it reserves the right to buy back its Australian BHP Billiton Limited shares at up to a 14 percent discount.

It will decide the per share amount for its special dividend in December once the off-market buyback is completed, based on the reduced amount of shares on issue.

"Returning this $10.4 billion will bring the total cash returned to shareholders to $21 billion over the last two years," BHP Chief Executive Officer Andrew Mackenzie said.

BHP's big return to investors comes as world no.2 miner Rio Tinto is returning to shareholders $3.2 billion reaped from the sale of its Australian coal assets on top of a $4 billion share buyback.

(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Hugh Lawson and Stephen Coates)