BHP Billiton weighs spin-off of unloved assets

Tue Apr 1, 2014 4:40am EDT
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By Sonali Paul

MELBOURNE (Reuters) - BHP Billiton (BHP.AX: Quote)(BLT.L: Quote) is weighing a range of options to simplify its portfolio of assets, including a possible spin-off of unwanted businesses such as aluminum and nickel into a separate company, the top global miner said on Tuesday.

"We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximize value for BHP Billiton shareholders," the company said in a statement.

Chief Executive Andrew Mackenzie has said over the past year that the company plans to focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations.

The company's statement on Tuesday came shortly after The Australian Financial Review newspaper reported that BHP was considering spinning off non-core assets into a separate company, offering shares to existing shareholders.

BHP shares rose as much as 2.2 percent to a three-week high after the report. They last traded up 1.7 percent at A$37.10 in a weaker broader market.

Spinning off a company with non-core assets would allow BHP to pare down at a time when it may be difficult to find buyers willing to pay a good price. It could also help flush out a buyer.

"It's a good bartering tool," said Tim Schroeders, a portfolio manager at Pengana Capital, which owns BHP shares.

"If you're going to go down the trade sale route, you can say, 'Yes, we'd like to get (these assets) off our books, but we do have this alternative in our back pocket. So if you're a buyer you need to come to the party.'"   Continued...

A promotional sign adorns a stage at a BHP Billiton function in central Sydney August 20, 2013. REUTERS/David Gray