AFP, Sydney :
Mining giant BHP Billiton Tuesday rejected an activist hedge fund proposal that it restructure the business and spin off its US petroleum arm, saying the costs and risks outweighed any benefits.
New York-based Elliott Advisors, a significant shareholder in the Anglo-Australian company, argued in a letter to directors and the media that its plan could unlock as much as 50 percent more value in the stock.
It proposed merging the British and Australian entities into a single Australian-headquartered and Australian tax resident listed company.
Elliott, run by billionaire Paul Singer, also urged BHP to demerge its petroleum business into a separate entity listed on the New York Stock Exchange and return more cash to shareholders through buy-backs.
“We have had dialogue with Elliott over many months, consistent with our commitment to shareholder engagement,” the world’s biggest miner said in a statement.
“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.”
BHP said it was constantly reviewing its dual-listed structure, which came about under terms of the 2001 merger of BHP Ltd and Billiton Plc that created the current mining group.
