Mining giant BHP has announced plans to leave the FTSE 100 index, in favour of a single listing with the Australian ASX 200 based in Sydney. BHP has been part of the FTSE index since 2001, after a merger with the UK’s Billiton that placed it on a dual listing on both stock exchanges.
“Now is the right time to unify BHP’s corporate structure,” said Ken MacKenzie, chairman of the world’s biggest listed mining company. “BHP will be simpler and more efficient, with greater flexibility to shape our portfolio for the future.”
BHP is one of the largest companies on the London stock exchange. The mining giant’s shares give the company a value of almost £130bn, second only to pharmaceutical company AstraZeneca at £133bn.
After revealing a deal to exit oil and gas by selling its petroleum business to Australia’s Woodside Petroleum, BHP made a move to remove its dual listing. This comes as chief executive Mike Henry divests from fossil fuel assets to focus on commodities such as copper, nickel, and fertiliser.
Henry told the Financial Times that now was the right time to switch to a simpler corporate structure. He said that the costs of unifying the dual structure had fallen to $500m, from $1.7bn in 2017 when Elliott Advisors, the activist investor, called on BHP to do so. This is mainly because of the resolution of a tax dispute with the Australian Government.
Under current rules, BHP will be removed from the index, with many UK shareholders forced to sell their assets as a result. However, shareholders could oppose this, leading to a similar conclusion as the failed 2018 plan by Unilever to drop the planned unification of its dual-listed structure into a single Rotterdam-based company following pressure from investors.
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Jamie Maddock, an equity research analyst at Quilter Cheviot, said that BHP’s departure was bad news for UK-focused investors as some asset managers and index-tracking funds would be forced to sell their shares.
Analysts said that they expected BHP to face less opposition than Unilever because unification would help narrow the discount between BHP’s shares in London and Australia.
“BHP will be simpler and more efficient, with greater flexibility to shape our portfolio for the future,” said MacKenzie. “Our plans announced today will better enable BHP to pursue opportunities in new and existing markets and create value and returns over generations.”