BHP name change not intended as riposte to Elliott Group

BHP name change not intended as riposte to Elliott Group

Elliott steps up pressure on BHP to ditch petroleum | Reuters

This follows a new attack from Elliott the previous day, when the browbeating NY hedge fund criticised BHP's strategy of selling off oil assets one at a time as "death by a thousand cuts" and said its discussions with other shareholders found broad support for a restructuring of the petroleum business and agreement that there should be a renewed focus on capital returns.

The funds manager has called for an open and independent review of BHP's petroleum business.

Mackenzie said: "Our path is deliberate, with value and returns at the centre of everything we do".

"We and other shareholders are concerned that despite the clear signs that the market is receptive to a new strategy for BHP, current management seems intent on quieting the enthusiasm for BHP to dig deeper in tackling the obvious shareholder value enhancement opportunities which exist", the letter said.

His comments come in direct response to Elliott's fresh call for an independent review of the mining giant's petroleum business, which the investor released only a few hours before Mackenzie spoke at the conference in which USA hedge fund's representatives are also attending.

This is the story many in the business media and the investment industry won't tell you - but that attack on BHP from a U.S. hedge fund and private equity group has collapsed as it has been forced to significantly recast its ideas.

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However, he said he was not convinced by Elliott's argument that now was the right time for BHP to divest petroleum assets.

Chief Executive Andrew Mackenzie met Wednesday with representatives from Elliott Management Corp., the activist investor pushing for the resources company to shed at least some of its oil-and-gas assets and boost shareholder returns.

Elliott's revised proposal follows weeks of canvassing BHP shareholders for their views. Instead, it has doubled down on its more plausible call to offload oil, which sits awkwardly amongst BHP's core iron ore, coal and copper mining activities.

BHP had no immediate comment on the latest proposal.

Elliott, which claims a 4.1 per cent stake in BHP's UK-listed unit, says it prefers a full or partial demerger of the unit, but recognises there are other possible solutions to unlock the latent value of the petroleum business.

BHP has said the costs of scrapping its dual-listed structure significantly outweigh the benefits.

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Analysts at Deutsche Bank and Citi have said BHP could unleash billions of dollars by selling part or all of its petroleum business, although Citi cautioned this would bring only a one-off benefit to shareholders and the company should focus on how to grow value for investors.

Its share price has fallen since Elliott launched its attack in April and the London stock is down almost 9 percent since the start of the year.

A source close to BHP said the company expected to meet Elliott in Barcelona.

BHP advanced 0.8 percent to A$24.02 in Sydney trading Tuesday, extending gains in the past year to 29 percent.

He said BHP now has major growth projects valued at up to US$25bn, offering potential average returns of more than 16% at consensus prices.

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