BHP Billiton under pressure to cancel London listing.

[Minesadouble]

BLT pressured by activist investor Elliot Management to cancel London listing and sell US petroleum business.
This will supposedly unlock a 51% increase in share value.

I like the increase in value but I'm not sure about the implications of holding an Aussie share in a U.K. SIPP.

[monabri]

This will supposedly unlock a 51% increase in share value

Then why are BHP Management not doing this for their shareholders?

"Elliott proposes that the Group replace the DLC with a single United Kingdom domiciled company, with a primary listing in London and with Chess Depository Instruments quoted in Australia on the Australian Securities Exchange"

Here's a bit more detail.

http://www.londonstockexchange.com/exch ... 89374.html

[Minesadouble]

Thanks Monabri, much better information than the summary I picked up through ADVFN.

[Minesadouble]

BLT have now responded:
"After reviewing the elements of Elliott's proposal, we have concluded that the costs and associated risks of Elliott's proposal would significantly outweigh any potential benefits."

I hope that this is sound thinking rather than a knee jerk reaction.
If the benefits were as high as Elliott's suggestion then I think the response needs more detail, in my personal opinion.

[flint]

Minesadouble said :
"After reviewing the elements of Elliott's proposal, we have concluded that the costs and associated risks of Elliott's proposal would significantly outweigh any potential benefits. I hope that this is sound thinking rather than a knee jerk reaction.
If the benefits were as high as Elliott's suggestion then I think the response needs more detail, in my personal opinion."

The link provided by Monabri sets out the full response from BLT.
This states that they have been in talks with Elliott for some time and sets out a lot more detail.

[Minesadouble]

Flint

Quite correct. I must, in future, read beyond the opening few paragraphs!
Mea Culpa

MAD

[DRB79]

BHPs current strategy is fine - long life, low cost assets. That includes oil.

This looks like a hedge fund getting inpatient. Creating an "additional 51% worth of value" is clearly an untested estimate. If it was that easy to create value BHP would no doubt be doing so.

And if there was such a difference in the current BHP price and potential "additional value" every person and his dog - including other activist investors - will be investing and asking for change.

Other than lowering costs, there isnt much additional value add BHP can do. Its a mining company & price taker. I think its being run as well as it can, it will always be at the mercy of commodity markets and China.

Not sure it should be considered a suitable high yield investment though given the cyclical nature of the industry its in.

[monabri]

DRB79 - If it was that easy to create value BHP would no doubt be doing so.

Absolutely - It would be an "Abracadabra moment". I agree, the 51% increase in value must be questionable!

Here's another "Foolish" take on the subject.

http://www.fool.co.uk/investing/2017/04 ... reholders/

[Halicarnassus]

Kind of off topic but BHP and all the other resources stocks, along with the Banks have been shunned by the Motley Fool (Australia) in all of their services. This is one reason why I now don't trust any of their services. They take and obviously impose blanket dogmatic positions on their analysts. In doing so, they have missed out on huge value opportunities.

[Dod1010]

The initial point about Elliott asking that the London listing being cancelled is 'way off beam in the same way that there was a similar comment about Unilever.

Both of these Groups have two separate listed companies which are quoted and are the parents of the Group and the business is then run as one unit as far as possible, BHP has its Australian company (Ltd) and its UK company (plc) and it is this dual Structure that Elliott would like to see removed, not the London listing of the parent.

In the same way Unilever has a plc in London and the NV company in the Netherlands which they are now looking at as a result of their recent review.

These structures are historical and I guess were to satisfy the nationalistic egos of both countries when the groups were formed. Shell had the same for many years and showed that they can be unified under one parent, with I assume, a saving in duplicated costs of running two parents.

Dod

[Gengulphus]

These structures are historical and I guess were to satisfy the nationalistic egos of both countries when the groups were formed. Shell had the same for many years and showed that they can be unified under one parent, with I assume, a saving in duplicated costs of running two parents.

Yes - but it's not just nationalistic egos that are involved, but also national governments' abilities to collect tax revenues. And while the nationalistic egos are probably less important than they were historically (or at least it's less politically acceptable to treat them as important), tax revenues are as important as ever - especially when huge companies such as Shell, Unilever and BHP Billiton are involved.

That's what lies behind Shell's two classes of share, with one paying dividends under the UK tax regime and received originally by shareholders in the UK company, and the other paying dividends under the Dutch tax regime and received originally by shareholders in the Dutch company: basically, it was the arrangement that could be 'sold' to shareholders in both companies and to both countries' governments.

So it is doable, as the example of Shell illustrates, and as you say it should result in saving duplicated management costs. But doing it does involve costs of its own, both initially in the negotiations about exactly how it's to be done, and (at least in the one example we have) ongoing ones in having to maintain two classes of share.

Gengulphus

[OhNoNotimAgain]

It also has significant implications for rules based funds too. At the moment only the UK listed shares are included in the UK mkt cap indices. This effectively underrepresents the true size of the company because it ignores the Australian listed component.

If it lost the Australian listing it would shrink the size of the Aussie index and increase the size of the UK one.


Rob

[flint]

BLT issued a detailed response to the Elliott proposals this morning. The full document can be found on their website. BLT estimate the cost of the corporate restructuring might be $1.2 billion with an annual saving of less than $2.5 million.
So, I have no worries this will happen any time soon.

[Gengulphus]

BLT issued a detailed response to the Elliott proposals this morning. The full document can be found on their website. BLT estimate the cost of the corporate restructuring might be $1.2 billion with an annual saving of less than $2.5 million.

A link is http://www.bhpbilliton.com/media-and-insights/news-releases/2017/04/bhp-billiton-review-of-elliott-proposals.

Gengulphus

[monabri]

Four more leading shareholders are adding pressure to Elliott Management's view. 21 April.

http://www.londonstockexchange.com/exch ... 08700.html

[monabri]

Got to hand it to Elliot Mgt - they are persistent! They're now meeting with the Oz shareholders to argue the case for a split up.

http://www.londonstockexchange.com/exch ... 11100.html

[77ss]

Got to hand it to Elliot Mgt - they are persistent!

How much of our money are they wasting, in pursuit of their own agenda?

[monabri]

And now there's a second voice.

"Tribeca Investment Partners, a “boutique” fund manager in Sydney, has urged the Anglo-Australian miner to sell its onshore US oil assets, return more cash to shareholders, and overhaul its board and senior management, including boss Andrew Mackenzie."


http://www.telegraph.co.uk/business/201 ... -investor/