BHP rejects proposal to divest petroleum assets

BHP rejects proposal to divest petroleum assets

Later that year it acquired Petrohawk Energy Corp. for $12.1 billion. Started in 1977, Elliott manages assets worth more than $32.7 billion, according to the company. It also says it has rights with its affiliates to acquire up to 0.4 percent of the issued shares in Sydney-listed BHP Billiton Ltd. 3,618,758 shares of the company's stock were exchanged.

The fund manager said its analysis showed that the plan would enable BHP's management to provide shareholders with an increase in value of up to nearly 49% on the Australia-listed shares and about 51% on the UK-listed shares.

"BHP Billiton assesses the value buybacks could create compared to the competing objectives of strengthening the balance sheet, investing in growth or making additional dividend payments", the statement said.

According to the Australian newspaper, Elliott Management Corp, wants BHP to de-list from the London Stock Exchange and sell off its USA petroleum assets in a similar way to which it recently spun off other assets into South32 Ltd (ASX: S32). BHP Billiton Plc is based in Collins Street, Melbourne Victoria.

"We believe global mining companies should be questioning the conventional diversified model in a new low-debt, shareholder returns focused world", Mr Hissey wrote in a note to clients.

Elliott's move on BHP follows its activist role in aluminum-parts maker Arconic Inc., which split from Alcoa Inc. previous year.

"The level of debt ascribed to the petroleum division is critical in valuing a demerger option, particularly given we only expect the United States petroleum assets to consume all cash generated for the next eight years", Macquarie told clients.

It also urged BHP to spin off its United States petroleum business for listing on the NY share market and to return more cash back to shareholders through buybacks.

Shares of BHP Billiton plc (NYSE:BBL) traded up 1.06% during midday trading on Tuesday, reaching $33.32.

Also, "the argument about access to capital markets is probably not quite as valid as it used to be", he said by phone. Ford looks SUV section growing further accounting for more than 45% of the non-premium USA retail auto industry in the next five to seven years.

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BHP is unlikely to carry out any radical changes before the appointment of a new chairman to replace Nasser, who said he'll step down later this year, Forster said.

Elliott's proposal initially sparked a rally in BHP shares, helping to drive the Australian stock more than 4 per cent higher on Monday and the miner's London stock about 2.2 per cent higher. Polaris Capital Management LLC raised its stake in BHP Billiton PLC by 15.8% in the second quarter.

BHP Billiton Plc is a global resources company.

The proposal also urged BHP to demerge its United States petroleum assets into an entity to be listed on the New York Stock Exchange.

It is understood BHP has not been aware of the details of Elliott's proposals because Elliott only sent a letter to BHP directors outlining its suggestions on yesterday, Monday, April 10.

BHP Billiton plc (NYSE:BBL) Industrial Metals & Minerals shows a Dividend Yield of 3.28% with a Payout Ratio of 29.90%.

Any separation of the petroleum business would mark a shift from the recent strategy under BHP CEO Andrew Mackenzie, who has been in his post for almost four years.

As a result, BHP Billiton has exposure to a wide range of commodities like coal, iron ore, copper and petroleum. BHP will direct about three-quarters of capital expenditure over the next five years to the two favored commodities, according to Macquarie Group Ltd. forecasts.

"BHP Billiton's approach is to optimise the long term value of the petroleum business through operating excellence". The 2.4% drop wiped billions off BHP's value.

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