BHP chief to discuss split call with critic

BHP’s top executive will meet major critic Elliott Management this week to discuss demands for a business overhaul that the activist group argues could deliver more than $22bn in value.

BHP’s first-half results missed analysts’ expectations and the shares fell 4.6%, on pace for the biggest daily drop since April. The world’s biggest mining company will also canvass other shareholders on the proposal to reorganise as a single company listed in Australia.

While flagging potential risks and costs associated with the New York-based fund’s demands, CEO Andrew Mackenzie pledged to discuss the issue further. He said he will probably say more after meeting with Elliott.

The hedge fund, which has been campaigning publicly for a range of changes at BHP for almost a year, in February called on the company to conduct an independent study to review potential benefits of a restructuring. BHP currently operates as two entities based in Melbourne and London.

The company is “open to all sorts of ways in which we can simplify and add value to shareholders, including what might lie within the dual-listed structure”, Mackenzie told reporters on Tuesday on an earnings conference call.

“However, I would point out that for every study that points to some large prizes, there are other studies that suggest this is a very risky venture indeed.”

Creating a unified company, headquartered and incorporated in Australia, with a primary listing in that country and additional listings elsewhere, would cost $391m, according to a report by FTI Consulting.

BHP, which continually reviews the possibility of a simpler structure, sees the costs as likely to be at least $1bn.

BHP’s top executives will hold meetings with almost all major global investors in the coming weeks. “I want to hear from them a bit more about how they’ve reacted to this proposal,” Mackenzie said.