Australia Says Will Block Move by Activist Investor to Remove BHP Billiton's Listing

By Rob Taylor Features Dow Jones Newswires

CANBERRA, Australia -- Canberra warned on Thursday that it would block moves being orchestrated by a U.S. hedge fund to remove mining giant BHP Billiton Ltd. from Australia's stock exchange.

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Activist investor Elliott Management Corp. is seeking to convince BHP shareholders to support a move to spin off its U.S. petroleum assets and significantly restructure the world's largest listed miner.

In BHP, Elliot has targeted a company that has lagged behind its mining peers during a commodity-price upswing. Elliott took particular aim at BHP's oil-and-gas portfolio in the U.S. and Australia, which produces about 660,000 barrels of oil equivalent a day but has dragged on the company's profit amid a prolonged crude-price downturn.

Elliott has called on the miner to ditch its dual Sydney-London listing and offer its shares only in the U.K., while making its headquarters and tax residences in Australia.

On Thursday, Australia's Treasurer Scott Morrison said the move would be contrary to the country's national interest and would breach orders put in place by the government more than 15 years ago that mandated a listing on the Australian Securities Exchange.

In 2001, former Treasurer Peter Costello agreed to a merger between BHP Limited and Billiton PLC on condition that the combined company was listed on the ASX and remained "the ultimate holding company for the businesses it owned prior to the merger."

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"It is unthinkable that any Australian government could allow this original Big Australian to head offshore," Mr. Morrison said. "The government welcomes foreign investment in Australia, but it is important that such investment be consistent with the national interest. This includes compliance with foreign investment conditions imposed on investments."

Elliott declined to respond immediately to the Treasurer's statement, while BHP said it wouldn't comment. BHP has previously said the costs and associated risks of Elliott's proposal significantly outweighed any potential benefits.

Mr. Morrison said if BHP implemented Elliott's proposal contrary to the previously imposed conditions then it may commit a criminal offense and could be subject to civil penalties under Australia's Foreign Acquisitions and Takeovers Act, Mr. Morrison said.

"These conditions apply indefinitely unless revoked or varied by me," Mr. Morrison said. "It is clear that the proposals under discussion would not be consistent with these conditions."

BHP traces its history to the Broken Hill Proprietary Company, which began mining in Australia in 1885. It opened its head office in Melbourne that year.

Mr. Morrison said BHP played an important role in Australia's resource-reliant economy and its shares were held by hundreds of thousands of Australians directly, and by millions more through superannuation funds and other investments.

If a deal proceeded without the government's consent, Mr. Morrison said he would order a divestment of the assets acquired and take court action.

"The conditions set down by then Treasurer Costello are in Australia's national interest and remain necessary and appropriate," he said. "There is nothing in what I have seen of the proposals to suggest otherwise."

--Ben Collins in Wellington contributed to this article.

Write to Rob Taylor at rob.taylor@wsj.com

(END) Dow Jones Newswires

May 03, 2017 19:55 ET (23:55 GMT)