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It’s a polite case of ‘Heard it before: Thanks, but no thanks’ from BHP Billiton as it provided a more “detailed response” to the proposal by activist investor Elliott Advisors to unlock value and spin off the miner’s US oil business.
Andrew Mackenzie, BHP’s chief executive, said in a statement to the ASX on Wednesday that:
BHP Billiton is now a stronger, simpler company, well-positioned for future economic conditions. We are confident we have everything in place to increase returns and significantly grow shareholder value.
Elliott was critical of BHP’s initial response to its proposal, and on Tuesday (US time) labelled it “dismissive and premature“.
BHP said on Monday, when Elliott’s proposal first came to light, it would deliver a more detailed response in due course. And it looks like Wednesday is that day.
The Anglo-Australian miner said today Elliott’s proposals were “nothing new” and that it was constantly assessing the aspects that the fund has in its crosshairs, namely the Sydney/London dual listing, the US petroleum business and capital management strategies.
BHP has, for the most part, reiterated arguments it made earlier in the week, particularly the defence of it capital management strategy.
The miner put a cost on Elliott’s proposal to unify the company’s dual-listed structure, saying it “could destroy $1.3bn in value to save less than $2.5m a year – for no identifiable or strategic benefit.”
It said its US petroleum portfolio, which it has admittedly slimmed down in recent years, is still “core” to the company’s strategy and “has the potential to create significant long-term value at high returns”.
BHP shares pared declines following the company’s response, with ASX-listed shares down 0.5 per cent just before the close in Sydney.