BHP Billiton CEO to Meet with Activist Shareholder Elliott
May 17 2017 - 02:24AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--BHP Billiton Ltd.'s (BHP.AU) Chief
Executive Andrew Mackenzie will meet 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.
The talks are set to take place on the sidelines of a mining and
metals conference in Barcelona, a day after Mr. Mackenzie told an
audience there the company was confident a strategy of cutting
costs and unlocking latent production capacity could boost the
value of the company by up to 50%.
Hours before the presentation, the New York hedge fund revised
its attack following BHP's rejection last month of its earlier call
for the company to spin off its U.S. petroleum business, collapse
its dual-listed structure around its London shares and adopt a
consistent plan of buying back shares.
Mr. Mackenzie didn't address Elliott's latest salvo in his
speech, and while the company said it would review the plans and
respond it rejected Elliott's suggestions it was misleading in its
earlier response and that it wasn't open to suggestions.
Elliott has accused BHP of being a chronic underperformer. It
first approached the mining and energy company last year, and has
over the last month been seeking support among other shareholders
in Australia and internationally for its proposals.
On Tuesday, it said that there was broad support among investors
for a restructuring of BHP's petroleum business and general
agreement that there should be a renewed focus on capital
returns.
The investment firm managed by Paul Singer has a reputation for
slowly grinding away at companies to push through changes.
In a shift, its plans now call for BHP to remain incorporated in
Australia and to retain full Sydney and London listings, as well as
Australian headquarters and a full Australian tax residence. That
appears to address concerns in Australia after Treasurer Scott
Morrison said any move to the U.K. would contrary to the country's
interest and would breach orders put in place by the government
more than 15 years ago with the merger of Australia's BHP Ltd. and
London-listed Billiton PLC that required a listing on the
Australian Securities Exchange.
Elliott instead said BHP's management should work harder to find
a solution to the legacy structure. It also conceded there were
other options for the oil and gas assets and called on the company
to launch an in-depth, independent review of its entire petroleum
division.
In his speech, Mr. Mackenzie said the petroleum business was
core to BHP's growth plans but he acknowledged the company had
over-paid and invested to aggressively to build a position in the
U.S. onshore shale sector. The company has pivoted back toward
conventional oil and gas production and while the shale business
now expected competitive returns, BHP was open to discussing a sale
of the assets, he said.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
May 17, 2017 03:09 ET (07:09 GMT)
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