BHP mulled leaving London and dropping dual listing – by James Chessell (Sydney Morning Herald – February 17, 2014)

Has BHP Billiton been reconsidering its dual listing on the Australian and London stock exchanges?

The official line from the world’s largest diversified resources is that no serious work has been done on collapsing the dual-listed company structure. A BHP spokewoman said: “We think this structure has worked and continues to serve shareholders well”.

Yet there are those who remain convinced that in the second half of 2013 a team was assembled to look simplifying parts of the vast $121 billion business, including the dual listings.

The project was known as “unification”, according to multiple sources, and later focused on simplifying internal processes, financial management and legal entity structures. It had the blessing of chief executive Andrew Mackenzie, who assumed the top job in May and will hand down what is expected to be a $US6.9 billion interim profit on Tuesday.

Everyone agrees that it was eventually decided that it would be too difficult to collapse the dual-listed structure. Not only would it be a highly complicated task but there were doubts the Australian market could handle a company with a market cap almost twice the size of Commonwealth Bank of Australia. But there is no mistaking the symbolic importance of the work that was done.

BHP gained its London listing when it merged with South Africa’s Billiton back in June 2001. The structure had, in theory, several benefits. A broader group of shareholders could buy the stock, particularly when many big mining fund managers were based in London.

Crucially, the structure meant it lined up with arch-rival, Rio Tinto, which had a London listing. BHP’s chairman at the time, Don Argus, had long coveted a merger with Rio and was keen to have a structure that would make it easy as possible to happen.

Argus got his chance in 2007, launching a bold $US350 billion takeover bid for Rio. But after 12 months, BHP walked away from the “deal for all seasons”. With a new chairman, Jac Nasser, installed in 2010 – and the heat coming out of the mining boom – it became clear a combined BHP/Rio was off the agenda for good.

With one of the key reasons for embracing the dual listed structure no longer a possibility, another source of frustration for some BHP executives began to bubble to the surface. The London-listed BHP shares have historically traded at substantial discount to Australian stock.

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