BHP holders set to back single listing as miner mulls M&A

A move that could ease the global miner’s return to big deals.
Image: Ian Waldie/Bloomberg

BHP Group is on track to win shareholder support to unify public holdings in a single Sydney listing, a move that could ease the global miner’s return to big deals.

Proxy votes showed over 96% of Australian shareholders favoured dropping the current dual-listing structure, ahead of a vote by holders of the London-listed entity later on Thursday. The proposal needs 75% backing from each group to get the green light.

Chief Executive Officer Mike Henry said last month that the share unification would make the company simpler and more agile. Once mining’s most aggressive dealmaker, BHP is mulling a return to large-scale M&A and has expanded its dealmaking team, including in London, according to people familiar with the matter.

The move will bulk up BHP’s presence on the Australia Stock Exchange. Its weighting on the benchmark S&P/ASX 200 share index will rise to about 10%, from 6.7%, to surpass Commonwealth Bank of Australia. There’s also likely to be a scramble among index-tracker funds to increase their holdings to reflect that higher weighting.

The group’s London shares climbed as much as 2.2% to a record high after opening, as metal prices also rallied. The Australian unit closed up 3.1% at its highest since August.

Skepticism

Some Australian investors have been critical of the switch, saying that it transfers value to London shareholders in giving them a one-for-one exchange even though the U.K. listing has consistently traded at a discount to the Sydney shares.

“That Australian shareholders wear the current value destruction from the collapse of the dual-listed company just to simplify M&A in the future is challenging to accept,” Crispin Murray, head of equities at Pendal Group Ltd., said in a note earlier this month. BHP has a poor track record in mergers and acquisitions in recent years, he added.

The dual listing dates back to 2001, when Australia’s BHP Ltd. merged with rival Billiton. The miner has been reviewing the structure for several years after Elliott Management Corp. pushed BHP to reorganize as a single company. Elliott argued that removing the dual listing would eliminate the discount between its shares in London and Sydney, reduce costs and bolster transparency.

Under the current arrangement, BHP has two headquarters and two main stock market listings, but is run as a single entity under the same management and board. The company first announced the change to its structure as part of its annual earnings results in August.

After the change, the miner will retain secondary listings in London, Johannesburg and New York.

© 2022 Bloomberg

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