BHP Billiton has rejected claims by activist hedge fund Elliott Advisors it is not open to suggestions from shareholders and that it was misleading in its response to Elliott's proposal to significantly restructure its operations.
"Our shareholder conversations have revealed extremely broad and deep-rooted support for proactive steps to be taken by management to achieve an optimal value outcome", it said in a letter to BHP's board, released publicly on Tuesday.
Elliott said it has spent the past month seeking feedback on its initial proposals from Australian and global investors, holding BHP shares worth tens of billions of US$.
The meeting came more than five weeks after Elliott first went public with its original plan to reform several aspects of BHP's structure.
They say that "a more nimble and focused independent petroleum business, with a more disciplined approach to capital management, would have avoided significantly overpaying for BHP's United States onshore portfolio".
The logical next step would be an in-depth, open and timely independent strategic review of the business, Elliott said.
Mackenzie outlined BHP's plans, which he argues could lift the value of the company by 50% and double its return on capital.
But it said it had been questioned by a number of shareholders on its proposal and accepted that there are regulatory issues.More news: Comac C919 takes off for maiden flight in China
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It would remain Australian headquartered and an Australian tax resident, Elliott said, retaining full ASX and LSE listings, with ordinary shares listed on the ASX.
BHP would also change its logo, he said.
BHP CEO addresses investors on plans at conference..
Chief Executive Andrew Mackenzie will brief investors including Elliott at a conference in Barcelona on Tuesday on plans that would increase long-term shareholder value, the company said.
"We are confident that continued delivery of these plans, from our stronger base today, could grow the value of our company by up to 50 per cent and nearly double the return on capital", he said.
Mackenzie said: "Our path is deliberate, with value and returns at the centre of everything we do".
The broker said it has now set a "Outperform" rating on shares of BHP Billiton PLC with a price target of 1500.
The investor blamed BHP's US$23bn venture into the U.S. onshore oil and gas sector, the US$8bn spent on petroleum exploration with no apparent value created and about US$9bn poured into share buybacks at inflated prices. It said there are a number of options that would unlock value-including selling or spinning off the USA business, and a sale or Sydney listing of the Australian and other oil and gas assets.