Elliott’s BHP plan was doomed, but the ulterior motive isn’t – Clyde Russell (Daily Mail/Reuters – April 12, 2017)

http://www.dailymail.co.uk/

LAUNCESTON, Australia, April 12 (Reuters) – When activist shareholder Elliott Advisors went public with its call to restructure BHP Billiton, it was most likely aware that the world’s largest mining company would reject the plan.

Elliott, which manages more than $32.7 billion and holds about 4.1 percent of BHP’s London-listed shares, wants the company to end its dual London-Sydney listing, hive off its petroleum assets in a separate listing in New York, and return more cash to shareholders.

By going public with the letter it wrote to BHP directors, Elliott should have known it had no chance of its proposal succeeding. Indeed, BHP soon shot down the plan, saying the costs would outweigh the benefits.

So why bother going to all the rigmarole of working out a restructuring plan, engaging the directors and then going public if there was little chance of success? Elliott may have been looking for a short-term bounce in the share price, which was duly delivered with the Sydney stock rising 4.6 percent to a close of A$25.73 ($19.30) on April 10, the day the proposal was released to the public.

But more likely is that Elliott wanted to kickstart a debate on how best to unlock value in BHP, and put pressure on management to return more of the benefits of the recent rise in commodity prices to shareholders.

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