Mining and Heavy Industries

Mackenzie urges support as Elliott continues to circle

BHP Billiton chief executive Andrew Mackenzie has appealed for investors to support the company’s management, as pressure for major changes from activist investor Elliott Management continues to ramp up.

Elliott Management, a US hedge fund with a roughly 4% stake in BHP, has publicly criticised BHP management in recent months, and has urged investors to force the sale of the miner’s US shale assets, to eliminate its dual-listed status, and to force a major board shake-up. Elliott was joined by Tribeca Investment Partners last month, with the Sydney-based fund also calling on BHP to sell its US shale assets, and overhaul its leadership.

After initially dismissing Elliott’s bid, Mackenzie has stepped up his opposition in line with his rivals’ growing enthusiasm, telling the ABC this week that BHP investors should more strongly support his team over Elliott’s.

“I would say to the BHP shareholders, stick with the plan we have through real engineering, and the real hard work of BHP women and men to lift the value of the company,” he was quoted as saying. “What we have from the activists is a bit of financial engineering where the value uplift is questionable at best.”

His statement came a day before the results of a survey from investor services firm Global Proxy Solicitation were published in several sources, indicating just under 48% of shareholders feel Elliott’s views “are warranted to create greater value,” while around 15% do not agree, and close to 38% remain undecided.

In a piece of good news for Mackenzie, over 36% of shareholders surveyed reportedly said he had handled Elliott’s attacks “effectively,” while just under 18% said it was mishandled, and 45% were uncertain.

The activist investors are nonetheless adamant that if any change is to happen at BHP, the board will need to change, too.

Tribeca portfolio manager Craig Evans this week reportedly told The Australian Financial Review, “When you want change, you can’t do that when the core of the board is the board that got you there”.

Former BHP advisor Brett Paton, who now runs the wealth management firm Escala, also reportedly urged his company’s clients this month to listen to the campaign being brought against BHP management by Elliott and Tribeca, and ask questions of the miner.

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