BHP Shareholders Will Vote On Its Massive $15 Billion Demerger In May

Image: Carsten Koall/Getty Images.

The demerger of BHP into two companies is on track and will go to a vote of shareholders in May next year, chairman Jac Nasser said.

Following the demerger, BHP will focus on iron ore, copper, petroleum, coal (mainly metallurgical coal in Queensland and thermal coal in New South Wales) and potash.

The smaller new company, valued about $15 billion and headquartered in Perth, would hold the aluminium and manganese businesses, nickel in Cerro Matoso, energy coal in South Africa, metallurgical coal in Illawarra and silver-lead-zinc mines in Cannington.

Approvals for the demerger have already been secured from the Foreign Investment Review Board and the Australian Taxation Office.

“We see benefits for both companies and for all shareholders,” Nasser said.

“For BHP Billiton, we can reduce costs and improve the productivity of our largest businesses more quickly.

“This means we should generate stronger growth in free cash flow and a superior return on investment.”

Under the proposal, shareholders keep their current shares, continue to receive dividends and will be entitled to shares in the new company in equal proportion to their BHP Billiton holdings.

Shareholder documentation will be released in March and an Extraordinary General Meeting is planned for May when the demerger goes to a vote of shareholders.

The new company’s shares will have a primary listing in Australia, a secondary listing in South Africa and a standard listing in London.

BHP posted a profit of US $13.832 billion, up 23.2%, for the year top the end of June.

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