Elliott applies US activist investor tactics to BHP offensive

Elliott Management Corp's activist campaign to shake up Anglo-Australian mining group BHP Billiton, relies on tested USA shareholder activism strategies to deliver one of the hedge fund's biggest ever bets on a company.

It is understood BHP has not been aware of the details of Elliott's proposals because Elliott only sent a letter to BHP directors outlining its suggestions on yesterday, Monday, April 10. In the letter, the fund manager also called for the adoption of a consistent capital-return policy that would seek share buybacks rather than using cash for what it called "value-destructive" large-scale acquisitions. The Elliott funds, together with certain of their affiliates, hold a long economic interest in respect of approximately 4.1% of the issued share capital of BHP Billiton plc ("PLC")[1].

"Based on commonly utilized valuation metrics for comparable businesses, the indicated value for BHP's USA petroleum business is [approximately] US$22 billion, which is well in excess of the current analyst consensus valuation for that business", said the Elliott Funds, which hold 4.1% of BHP Billiton plc.

BHP did not immediately provide comment on the matter when contacted by Reuters, but CEO Mackenzie has previously rejected the idea of spinning off oil assets and Chairman Jac Nasser has said overhauling the dual-corporate structure could be too costly.

BHP shares rose by 3.5% in NY overnight and by 2.2% in London, after gaining 4.6% to A$25.73 in Australia yesterday.

The other element of the Elliott Advisors proposal, BHP spinning out its U.S. petroleum assets into a separate entity to be listed on the NY stock exchange, won broader support from analysts, although whether this would be beneficial to shareholders would depend on the level of debt the entity would be loaded up with if the plan were to proceed.

Elliott, referring to talks already held with BHP management, said the changes could boost shareholder value by about 50%.

Elliott's proposal of a primary listing in London would require the approval of Australia's Foreign Investment Review Board, BHP said.

Elliott also proposed that BHP Billiton split off its US oil and gas division, a move the company has rejected previously.

"We have laid the foundations for the group to substantially grow the base value of its operations. BHP should embrace a broadening of the discussion to include all shareholders", the hedge fund said.

BHP Billiton PLC has GBX 1850 highest and GBX 515 lowest target.

Over the last twelve months BHP Billiton PLC's stock price has increased by 75.29% from 750.77 to 1316.

A spinoff of USA oil assets would contradict the BHP's recent focus on growth in that division, he said.

Aberdeen is the second-biggest investor in BHP's London-listed shares, with a 4.9 percent stake worth $1.3 billion, regulatory filings to August past year collated by Thomson Reuters showed. "BHP Billiton's approach is to optimize the long-term value of the petroleum business through operating excellence". The Firm is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium.

"As you know, Paul was very much involved with the anti-Trump or as they say "Never Trump" and Paul just left and he's given us his total support and it's all about unification". The Iron Ore segment is engaged in mining of iron ore.

Related Articles

  • USPSTF Drafts Prostate CA Screening Recommendations

    USPSTF Drafts Prostate CA Screening Recommendations

    The statement serves to guide clinicians and patients in decision making about screening for prostate cancer. "And having the U.S. Medicare and many private insurers have continued to pay for the screening. "The PSA test is not a great test".

    Wisconsin churches on alert amid hunt for gun theft suspect

    Police were later called to reports of a auto fire shortly after the burglary and discovered the vehicle belonged to the suspect. Officials said they are not considering these threats "terroristic" until they know more about Jakubowski's motive.

    Rock Hall 2017 class includes Pearl Jam, Tupac and Journey

    Later, Alicia Keys performed a medley of Shakur's songs on piano, including "Dear Mama" and " Changes ". Pearl Jam closed out the night with a searing all-star jam of Neil Young's "Rockin' in the Free World".
  • Adani Group Suffers a Setback As Supreme Court Rejects Compensatory Power Tariff

    Adani Group Suffers a Setback As Supreme Court Rejects Compensatory Power Tariff

    In any event, the fundamental basis of the PPAs between the parties was not premised on the price of coal imported from Indonesia. The bench set aside the orders of the commission and Electricity Appellate Tribunal, which remitted the matter to the commission.

    Delta cancels flights for third day after storm hits Atlanta

    A ground stop at Atlanta's Hartsfield-Jackson International Airport is causing flight delays in Tallahassee. Delta is offering a travel waiver this weekend to help customers rebook flights without change fees.

    India Offers $4.5 Bn Credit Line to Bangladesh, 22 Pacts Signed

    In a reference to Pakistan, he said there was a third type of mentality that keeps terrorism above humanity. But, today we were not informed about Prime Minister's visit to the airport", Pathak said.
  • Budget Session a winner for treasury benches: PM

    Budget Session a winner for treasury benches: PM

    Briefing media in after the meeting, Finance Minister Arun Jaitley said that the popularity of NDA is growing in the country. NDA representatives lauded PM Modi's efforts in providing a corruption-free government at the Centre.

    Antoine Griezmann Rumoured to Snub Real Madrid Transfer, Re-Sign with Atletico

    Griezmann was almost gifted the opener just before half-time as he intercepted Sergio Ramos's wayward crossfield pass and bore down on goal.
    At least 1 dead after shooting near upscale mall in South Florida

    At least 1 dead after shooting near upscale mall in South Florida

    A witness said there was panic inside the gym. "So that's exactly what we did", said Tim Hartog, the restaurant's general manager. More than a dozen police cars and firetrucks were outside the mall for hours after the shooting.
  • Need more time to file taxes?

    Need more time to file taxes?

    An extension of time to file will automatically process when taxpayers pay all or part of their taxes electronically by April 18. Because Emancipation Day is observed in Washington , D.C. on the next business day, the deadline moves to Tuesday, April 18.
    Google says it does not have systemic compensation disparities despite DoL claims

    Google says it does not have systemic compensation disparities despite DoL claims

    In fact the company recently claimed that it has closed its gender pay gap globally and provides equal pay across races in the US. The government has collected information that points towards the violation of federal employment laws by Google , the DoL said.
    India supported Bangladesh wholeheartedly during 1971 war, says Bangladesh PM Sheikh Hasina

    India supported Bangladesh wholeheartedly during 1971 war, says Bangladesh PM Sheikh Hasina

    Advani was also forced to quit after RSS and several leaders within the BJP openly slammed him and demanded his resignation. She also stayed at the Rashtrapati Bhavan which again broke the tradition of selecting guests for the presidential palace.