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, AFP reported.
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.
Elliott commissioned a report by FTI Consulting that found a restructure would deliver more than $22 billion in value to shareholders if BHP’s British and Australian entities were unified, with $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.”
