“Clearly it’s a big blow losing such a heavyweight,” Neil Wilson, chief market analyst at Markets.com, said in an email. “But it will help balance the FTSE 100 a bit more with less leaning on basic resources. Bit less mining, bit more room for up-and-coming tech is surely not a terrible thing,” he said, adding that ultimately BHP is an Australian company at heart and should be listed there.
BHP declined as much as 6.9% as of 10:02 a.m. in Sydney trading Wednesday, as the flagship S&P/ASX 200 index fell 0.4%. The producer rose 3.4% in London trading Tuesday.
While BHP is the second-largest company in the FTSE 100, behind AstraZeneca Plc, it only ranks 10th by weighting because of the dual listing, representing 2.6% of the index. The proposal — which is subject to approvals including by the company’s board — would leave BHP with secondary listings in London, Johannesburg and New York. Shareholders of the London-listed vehicle will get shares of the Sydney-listed entity on a one-for-one basis.
The miner has been reviewing its listing structure for years after Elliott Management Corp. pushed BHP to reorganize as a single company. Elliott — which also advocated for the company to get out of oil and gas — argued that removing the dual listing would eliminate a discount between its shares in London and Sydney, reduce costs and bolster transparency.
“Could there be some shareholders who are forced sellers? Yes, clearly,” BHP’s Henry said in a Bloomberg TV interview. “We continue to see shareholders in the Plc as very important and I want to see as many of those as possible continue to hold BHP.”
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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 announced the change to its structure as part of its annual earnings results Tuesday, confirming an earlier Bloomberg News report.
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