Shares rise in mining giant BHP Billiton after call for structural reform
Shares in mining giant BHP Billiton rose sharply on Monday after it emerged activist investor Elliott Advisors is calling for an overhaul of the company's structure.
Elliott's proposals, outlined in a letter to directors of the firm, include unifying BHP's dual-listed structure into a single Australian-headquartered and tax resident entity.
BHP is currently listed in both London and Australia, with Elliott pushing for a de-listing in the capital.
Elliott, which owns 4.1% of BHP, is also demanding that the group demerge its US oil business and return more money to shareholders through shaking up its tax structure.
"The goal is to provide details of the BHP shareholder value unlock plan to all of BHP's shareholders, so that BHP can engage openly with all parties on the plan to unlock shareholder value," Elliott said in the letter.
The activist, which has a reputation for intervention in companies, said its proposals could help boost shareholder returns by circa 50%.
For its part, BHP rejected Elliott's plans, saying: "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.
"We have laid the foundations for the group to substantially grow the base value of its operations. Elliott's proposal would put this at risk."
It argued that, since 2001, BHP has returned around 23 billion US dollars to shareholders in buybacks and approximately 56 billion US dollars in cash dividends.
Shares in BHP rose 2.76% to 1,323p in London.
Helal Miah, investment research analyst at The Share Centre, said: "We have seen a modest recovery in a broad range of commodities since the lows at the start of 2016.
"With all these dynamics coming together, interested investors may want to note that BHP has reported encouraging numbers in recent trading updates.
"The ongoing restructuring is taking BHP Billiton back in the right direction and we believe that the worst may be over for the commodities sector.
"We are therefore continuing with our Buy recommendation on the stock for investors seeking a balanced return and willing to accept a medium to high level of risk."