Mining and Heavy Industries

BHP’s Elliott shake-up gains traction

A pair of major BHP Billiton shareholders have reportedly voiced their in-principle support for activist investor Elliott Management’s campaign for a restructure at the multinational mining and energy giant.

The Fairfax report is the latest development in an ongoing battle between Elliott and BHP, with the former accusing the latter of wasting the spoils of the mining boom by ‘thinking big’, “instead of thinking about shareholders”.

A website published by Elliott argues that BHP has wasted billions of dollars moving to a dual-listed structure, making share buybacks at inflated market prices, and investing in US shale and petroleum while creating “no apparent value” in the process.

BHP has rejected pressures to restructure and abandon its US shale efforts, but according to this week’s AFR report a pair of major shareholders – Australian Foundation Investment Company and Wilson Asset Management Company – are both interested in Elliott’s ideas after a meeting with the activist investor in Sydney.

“I actually think they have been helpful in the sense that they have brought into the public focus the fact that BHP has actually underperformed over the last three, five, to 10 years and nobody can deny that is true and management and the board aren’t denying that either,” AFIC managing director Ross Barker was quoted as saying. “We’ve got an open door. [Elliott] have come in to see us.”

Announcing an 8% growth in iron ore production in a quarterly announcement on Wednesday, BHP chief executive Andrew Mackenzie remained positive about the miner’s diversified business.

“Our relentless focus on safety, productivity and capital discipline will support strong growth in shareholder value,” he said.

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