BHP Billiton – the world’s biggest miner – has announced it will shift a number of its businesses into a separate company in order to focus on its most profitable activities.
In essence it is a demerger as most of them were acquired by BHP when it merged with Billiton in 2001.
The new entity, worth an estimated $16 billion (12 billion euros), will include aluminium, manganese, nickel, silver, lead and zinc, as well as coal mines in some countries.
The move to simplify BHP Billiton around production of iron ore, copper, coal and petroleum is intended to boost cashflow growth and profit.
Investors were not impressed and the share price fell, but analysts said that was because the company did not announce a special dividend or a buy back of the stock and that the sell-off was overdone.
BHP has said it wants to pay down its debt before returning capital to shareholders.
Chief Executive Andrew Mackenzie, who has been in the top job for just over a year, said: “By concentrating on what we do best, the development and operation of major basins, we can improve our productivity further, faster and with greater certainty.”
The new company will be headquartered in Perth and listed in Australia, with a secondary listing in South Africa. Shareholders in BHP Billiton Ltd and BHP Billiton Plc would receive shares in the new company on a pro-rata basis.
BHP confirmed the spin-off as it reported an 8 percent rise in second-half underlying attributable profit to $5.69 billion (4.27 billion euros), just below forecasts.