Activist investor Elliott Management Corp. has increased its stake in BHP Billiton Plc (BHP) to 5%, and claimed its plan for an overhaul of the mining giant will be supported by the business's incoming Chairman.
"Recent statements by the company give us confidence that Chairman-elect Ken MacKenzie will heed shareholders' calls to take constructive steps to enhance value for BHP and its owners," Elliott said Wednesday, Aug. 16, in a statement that also announced its increased holding.
BHP's London-listed shares climbed just over 2% Wednesday to 1,369.5 pence. The stock has added 30% over the past year, lagging rivals including Rio Tinto Group (RIO) , which has climbed 38%, and Anglo American Plc (AAUKF) , up 42%.
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New York-based Elliott, led by Paul Singer, has been agitating for change at BHP since April when it went public with demands that the world's largest mining company by value sell its U.S. shale assets, consider a separate listing for its offshore oil business and abandon its dual listing on the London and Australian stock exchanges.
Elliott has claimed that its plan could create $46 billion of additional value for shareholders, equivalent to just under 50% of BHP's current market capitalization of about $101 billion.
The demands have been dismissed by BHP's CEO Andrew Mackenzie, who claims to have twice reviewed the role of oil at the business and concluded on both occasions that the operation was better within BHP than outside it. Elliott believes that a separately listed oil unit could be valued at about $22 billion, or about $15 billion more than it estimates it is worth within BHP.
"The election of a new chairman is an opportunity for action. With new leadership, shareholders fully expect the true value of their company to be unlocked - something which we are confident BHP's Chairman - elect has firmly in mind as he takes the reins," Elliot said. "At the same time, our increased shareholding leaves us well placed to monitor BHP's progress and hold it accountable for delivering results."
The new chairman will take up his role in September. Ken Mackenzie is a relative outsider at BHP, having joined the board just over a year ago. He has a reputation as a deal maker from his days as CEO of Amcor Ltd. when, from 2005 to 2015, he oversaw the sale of the packaging businesses lower growth and sub-sized operations and snapped up rivals to expand international operations.
Mackenzie's appointment as Chairman increases the likelihood of the sale of BHP's U.S. shale assets and could lead to management changes, according to Citigroup Inc. analysts.
BHP will report its full year results on Aug. 22.
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