Australia to Block Elliott's Plan to Shift BHP Billiton's Listing to London -- Update

By Rob Taylor Features Dow Jones Newswires

CANBERRA, Australia--Australia's government warned it would block moves being orchestrated by activist investor Elliott Management Corp. to shift mining giant BHP Billiton Ltd.'s stock listing from Australia to the U.K.

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Representatives from the U.S. hedge fund have been in Australia this week seeking to convince BHP shareholders to support a move to spin off its American 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., which has been hit with hefty write-downs in recent years and 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. The shares would trade in Sydney as depositary instruments.

On Thursday, Australian 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 Ltd. and Billiton PLC on condition that the combined company was listed on the ASX and BHP remained the ultimate holding company for the businesses owned before 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."

Both Elliott and BHP Billiton declined to comment on Mr. Morrison's remarks. 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 could be subject to civil penalties under Australia's Foreign Acquisitions and Takeovers Act.

"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 savings 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."

Rio Tinto PLC, another major global miner that has maintained a dual Sydney-London listing since 1995, hasn't been approached by any activist shareholders about the structure, Chairman Jan due Plessis told the company's annual general meeting on Thursday. "The cost is minimal and therefore we have not given serious thought at any time to changing the structure," he said.

Ben Collins in Wellington contributed to this article.

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

(END) Dow Jones Newswires

May 04, 2017 04:40 ET (08:40 GMT)