BHP Shareholders Back Single Listing as Miner Mulls M&A

(Bloomberg) — BHP Group won shareholder support to unify public holdings in a single Sydney listing, a move that could ease the global miner’s return to big deals and will see the U.K. lose one of its biggest companies.

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Both London and Australian investors overwhelmingly approved the move, according to a statement from BHP on Thursday.

The vote will see BHP will move to a primary listing in Australia after collapsing a dual arrangement that dates back to the company’s creation 20 years ago when Australia’s BHP Ltd. merged with rival Billiton. It will also see the U.K.’s FTSE 100 lose its third-biggest company.

Collapsing its dual listing is part of a series of sweeping changes at the world’s biggest miner since Chief Executive Officer Mike Henry took over in early 2020. The company is seeking to expand in metals that will be needed for the green-energy transition, and is in the process of exiting oil and gas while pouring billions of dollars into a giant new potash mine in Canada.

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 proposal needed 75% backing from both U.K. and Australian shareholders to get the green light.

READ: BHP Revives Appetite for Deals With Biggest Rivals in Sights

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 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.

(Updates with confirmation of shareholder support in first and second paragraphs)

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By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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