BHP should take Elliott's activism as a compliment

Terrell Bush
May 29, 2017

BHP rejects Elliott's claim that it has been misleading in responding to proposals and will review and reply to the letter as appropriate, the company said in an emailed statement.

May 16 Elliott Management on Tuesday revised its proposal for an overhaul of BHP Billiton's corporate structure, calling for the mining giant to remain incorporated in Australia.

"Our roadmap today contains an enhanced set of opportunities that will see us prosper and grow value per share throughout the cycle, and in multiple price scenarios", he said.

The plan would also raise BHP's market value by $5 billion and likely cost about $200 million, as opposed to the producer's estimate of about $1.3 billion, the fund said.

It also said it had "deep-rooted support" among BHP shareholders for a review of BHP's USA petroleum business. It said there are a number of options that would unlock value-including selling or spinning off the USA business, and a sale or Sydney listing of the Australian and other oil and gas assets.

Chief Executive Andrew Mackenzie met Wednesday with representatives from Elliott Management Corp., the activist investor pushing for the resources company to shed at least some of its oil-and-gas assets and boost shareholder returns.

Sources said Elliott boss Paul Singer was not present in the meeting, but several members of his Hong Kong-based team were in attendance. "I don't think there's that much to be gained from an independent review of the oil business".


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

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

Elliott Advisors wants to dissolve BHP's costly dual-listed structure and have its assets transferred to a new company that would be incorporated and listed in Britain.

An example would be International Consolidated Airline Group, which resulted from the 2010 merger of British Airways and Iberia.

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

BHP has cut costs, invested in major growth projects, and has options to increase production capacity across its portfolio, Mr Mackenzie said.

Other reports by TheDigitalNewspaper

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