BHP demerger plan not share slide culprit

BHP demerger plan not share slide culprit

After the close of Australian trading on Tuesday BHP announced a 10 per cent higher $US13. 4 billion US dollar profit for the year to June, and confirmed plans to demerge a portfolio of mid-size resource assets and pare itself back to four big divisions - iron ore, coking coal, copper and petroleum.

It did not announce a buyback, however, and the market response was savage. The shares fell by 4. 9 per cent in London, opened sharply down on Tuesday’s close in Australia on Wednesday morning, and ground their way to a 3. 9 per cent loss for the day.

In a normal year, almost 50 per cent of its revenue and more than 60 per cent of its earnings before interest, tax, depreciation and amortisation will also come from Australian operations, including the Cannington silver, lead and zinc mine in Queensland, the Worsley bauxite mine and alumina refinery in Western Australia and the Illawarra coal mines in New South Wales.

As a slide in BHP Billiton’s share price that began in London on Tuesday night spilled into the local market on Wednesday morning, BHP and advisers began asking the obvious question: were BHP shareholders giving the group’s demerger plan the thumbs down?

The sensitivity of London investors to listing location issues was also heightened just before BHP’s announcement when AngloGold Ashanti announced that it was taking its infrequently-traded shares off the London Stock Exchange.

The Australians will inherit about 60 per cent of the new company’s shares - but 100 per cent of its shares are going to be included in the ASX . 4 ” /> Macquarie’s dirty little secret: Select clients were … 5 ACCC pursues petrol chains over price information …

BHP’s Australian shares rose by 5. 1 per cent to $39. 68 between August 19 and the close of trade on Tuesday afternoon, just before BHP’s big announcement.

Read more here: SMH


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