Activist investor Elliott slams BHP Billiton for "do nothing" approach

Randall Padilla
May 17, 2017

Jefferies & Co gave the share price of BHP Billiton PLC a price target of 1700 meaning the broker expects a potential upside of 43.7% from BHP Billiton PLC's current market price of 1183. BHP would also change its logo, he said.

It also said it had "deep-rooted support" among BHP shareholders for a review of BHP's US petroleum business.

In a letter to BHP's directors, Elliott said its talks with a number of shareholders found broad support for restructuring the petroleum business, agreement that there would be clear benefits to unifying the dual-listed structure and a shared view that there should be a renewed focus on capital returns.

The rebranding comes at a sensitive time for the company, with US-based hedge fund Elliott Advisors, a significant shareholder, pushing for a restructure of the business, arguing as much as 50 per cent more value in the stock could be unlocked.

A source close to BHP said the company expected to meet Elliott in Barcelona.

The miner said chief executive Andrew Mackenzie will update shareholders on its plans to significantly grow long term shareholder value. William Blair Investment Management LLC now owns 744,548 shares of the mining company's stock valued at $26,640,000 after buying an additional 669,330 shares during the period. BHP also has technology programmes in place to improve safety, lower costs and unlock resource with an unrisked value of up to US$12bn.

Over the last 52 weeks BHP Billiton PLC's stock price has increased by 0% from 0.00 to 1183.

Responding to concerns raised by the Australian government, Elliott on Tuesday backtracked on its proposal for BHP to have its main listing in London, saying that it could remain incorporated in Australia and stay an Australian tax resident, retaining full listings on the Australian and London bourses.

BHP is however divesting non-core parts of its USA shale assets.

"Management's claims of illusory benefits of the DLC structure and phantom costs of unification are not the way to deal with a value-distorting and obsolete group structure", said Elliott. Cqs Cayman Lp sold 924,717 shares as the company's stock rose 2.67% with the market.

"What this shows is that Elliott aren't fly-by-night, they are clearly sticking around", said Andy Forster, senior investment officer at Argo Investments Ltd., which manages more than A$5 billion ($3.7 billion) and holds BHP's Sydney-listed shares.

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