BHP Billiton CEO Meets Activist Shareholder Elliott Amid Pressure -- Update
May 17 2017 - 10:05AM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia-- BHP Billiton Ltd. 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.
The talks took place at a mining-and-metals conference in
Barcelona, a day after Mr. Mackenzie told an audience there the
company was confident a strategy of cutting costs and unlocking
latent production capacity could boost the value of the company by
up to 50%.
After the meeting, an Elliott spokesman said the meeting was
private but constructive. A BHP spokesman declined to describe the
meeting beyond calling it private.
The New York hedge fund has revised its attack on BHP in the
past two days, giving up on its demand that the company abandon its
dual U.K.-Australia structure. But Elliott still says BHP is a
chronic underperformer and must spin off its U.S. oil business and
adopt a consistent plan of buying back shares.
It first approached the mining-and-energy company last year, and
has over the past month been seeking support among other
shareholders for its proposals.
On Tuesday, Elliott said there was broad support among investors
for a restructuring of BHP's petroleum business and general
agreement that there should be a renewed focus on capital
returns.
BHP has said it would review the plans and respond. It rejected
Elliott's suggestions it was misleading in its earlier response and
that it wasn't open to suggestions.
In his speech on Tuesday, Mr. Mackenzie said the petroleum
business was core to BHP's growth plans but he acknowledged the
company had overpaid and invested aggressively to build a position
in the U.S. onshore shale sector. The company has pivoted back
toward conventional oil-and-gas production and while the shale
business now expected competitive returns, BHP was open to
discussing a sale of the assets, he said.
Elliott has a reputation for slowly grinding away at companies
to push through changes.
In a shift, its plans now call for BHP to remain incorporated in
Australia and to retain full Sydney and London listings, as well as
Australian headquarters and a full Australian tax residence. That
appears to address concerns in Australia after Treasurer Scott
Morrison said any move to the U.K. would be contrary to the
country's interest and would breach orders put in place by the
government more than 15 years ago with the merger of Australia's
BHP Ltd. and London-listed Billiton PLC that required a listing on
the Australian Securities Exchange.
Elliott instead said BHP's management should work harder to find
a solution to the legacy structure. It also conceded there were
other options for the oil-and-gas assets and called on the company
to launch an in-depth, independent review of its entire petroleum
division.
Scott Patterson in London contributed to this article.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
May 17, 2017 09:50 ET (13:50 GMT)
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