New York-based Elliott Advisors commissioned a report that found a restructure would deliver more than US$22bn in value to shareholders if BHP’s British and Australian entities were unified
Mining giant BHP would reap US$22 billion in value for shareholders if it restructures into one Australian entity and scraps its dual-listing, a key US hedge fund and activist investor has said.
New York-based Elliott Advisors, a significant shareholder in the world’s biggest miner, has been pushing hard for the Anglo-Australian firm to dissolve its costly dual-listed structure.
But unlike its previous proposal of a new company incorporated and listed in Britain, which was rejected by BHP, Elliott has now suggested a single entity incorporated and headquartered in Australia.
“It is beyond serious doubt that unifying BHP’s current, inefficient DLC (dual-listed company) structure would create significant value for shareholders,” Elliott said in a statement late Tuesday.
Elliott commissioned a report by FTI Consulting that found a restructure would deliver more than US$22 billion in value to shareholders if BHP’s British and Australian entities were unified, with US$391 million in costs.
In a letter to chairman Ken MacKenzie, it called on the board to publicly commit during its half-year results announcement on February 20 that the firm would “undertake an immediate, independent and transparent review of unification”.
Under the suggested structure, a new Australian umbrella company would acquire the two existing halves of BHP — BHP Ltd (Australia) and BHP plc (Britain).
It would have a unified shareholder base with a primary listing on the Australian Securities Exchange.
The miner did not have any immediate comment, but previously said the initial proposal would attract significantly more costs than benefits.
David Lennox, a resources analyst at Fat Prophets, said the dual-listing was something of an anachronism.
“There’s no doubt with modern technology, the structure is probably a little antiquated. We don’t need to have two sets of management on either side of the globe anymore,” he told AFP.
“The structure serves them well… it’s outlived its life but that doesn’t mean it’s broken.”
BHP’s Australian roots stretch back to the Broken Hill Proprietary Company, which began operations in the Outback in 1885.
It opened its head offices in Melbourne the same year, but became BHP Billiton in a merger with the South African company that bore that name in 2001.
In May last year, the miner dropped the name Billiton in a rebranding exercise to build its standing as a major Australian company rather than a multinational giant.