This is the story many in the business media and the investment industry won’t tell you – but that attack on BHP from a US hedge fund and private equity group has collapsed as it has been forced to significantly recast its ideas.
Elliott Advisers on Tuesday called for an independent review of the mining giant’s petroleum business and said it was now open to a unified company that would retain its full share market listing in Australia and London.
In fact Elliott Advisors has made a 180 degree change in its plans for shaking up BHP after being confronted by opposition from not only the Federal government but a string of local investors concerned that the original plan would damage the value of their shareholdings by cutting back on dividend imputation and other benefits from the company being based in Australia.
Elliott said it has changed its proposal so that the miner’s incorporation would remain in Australia, it would remain Australian headquartered and an Australian tax resident, Elliott said, retaining full ASX and LSE listings, with ordinary shares listed on the ASX.
Elliott had been pushing originally for BHP to collapse collapse its dual listings on the London and Australian sharemarkets, and move its domicile and primary listing to London, and spin out its North American oil and gas assets.
In a detailed statement on Tuesday, Elliott claimed the global miner’s investors want a renewed focus on costs.
Elliott claims its recent meetings with local and overseas investors in BHP "reveals extremely broad and deep-rooted shareholder support for proactive steps to be taken by BHP management to review its petroleum business"
Elliott’s change of the focus of its attack on BHP, its board and management by calling on the company to concentrate more on costs means that of its original proposal, only the spinning off the US oil and gas operations has been retained.
The call for a renewed focus on costs for example is a load of rubbish as much of the original criticisms were.
For example it is a call that ignores for example the savage cost cutting that has gone on in its Western Australian iron ore operations in recent years.
Those efforts have seen BHP’s costs per toe of iron ore dropped from around $US29 a tonne to $US13 a tonne. Copper and coal costs have also been slashed as well.
"We will review the materials in full and formally respond as appropriate," BHP said in a statement, adding that chief executive Andrew Mackenzie will update shareholders on its plans to significantly grow long term shareholder value. Elliott claimed its recent meetings with local and overseas investors in BHP "reveals extremely broad and deep-rooted shareholder support for proactive steps to be taken by BHP management to review its petroleum business".
