The move is one of a series of key changes chief executive Mike Henry has kicked off since assuming the top post in early 2020.
It would end a 20-year-old arrangement that has seen an Australian company and a British company operate with the appearance of a single company, sharing all assets, profits and dividends.
With a market capitalization of £128 billion, BHP is currently the third biggest company on the FTSE 100, an index that tracks the 100 companies listed on the London Stock Exchange with the highest market capitalization, behind Shell and AstraZeneca.
“Today BHP’s portfolio is simpler and focused on growing long-term value from future facing commodities,” chair Ken Mackenzie said at the meeting. “And we require a corporate structure that supports this — that is fit for purpose.”
The dual-listed structure, which was constructed in 2001 for BHP’s merger with Billiton, had served the company well for many years, MacKenzie said. But the board and management believed its suitability had diminished over time.
“We are not the same group we were in 2001,” he said, adding that the transaction would cost between $350 million and $450 million to complete. That compares to the more than $1 billion it would have cost in 2017 when activist investor Elliott Management urged BHP to unify.
20-year-old arrangement
When the dual-listed structure was first established in 2001, about 40% of BHP’s earnings were generated by the UK entity. Following a string of portfolio changes over the years, however, that contribution has since fallen below 5%.
The move is also expected to create a smoother path for the sale of BHP’s petroleum division to Woodside Petroleum, Henry has said.
The company dealt a blow to British investors in August 2021 when it said that it wanted to ditch its dual-listed status and retreat to a single primary listing in the home country.
“(Share) unification will simplify BHP’s structure, make it easier for the company to make equity-based acquisitions, and make it easier for other corporate restructurings, including the Petroleum/Woodside merger,” Jefferies analysts said at the time.
The company’s shares in London have traditionally traded at a deep discount to Australian stocks.
UK investors, including Legal & General expressed concern because the reform would mean BHP dropping out of the FTSE indices, pressuring passive investors and others benchmarking against those indices to sell their shares.
BHP will retain secondary listings in London, Johannesburg and New York.
(More to come…)
