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Can miner BHP Billiton (BLT) deliver more value for shareholders? The market certainly seems to think so, given the positive share price reaction to proposals by activist investor Elliott to shake up the FTSE 100 member. We think now is a good time to buy its shares at £13.25.
BHP’s stock moved up nearly 3% on 10 April when Elliott suggested it adopt a three-step plan which could potentially boost shareholder value by about 50%. The plan includes spinning out its US petroleum assets and buying back shares.
The miner responded by saying the costs and risks would ‘significantly outweigh any potential benefits’. We don’t believe this is the last you’ll hear on the matter.
Elliott successfully campaigned for change at investment trust Alliance Trust (ATST) after much persistence.
There are many other activist investors flexing their muscles with good levels of success on the market, putting pressure on targeted companies to duly respond.
Takeover activity is even enforcing change. For example, Kraft Heinz’s recently-spurned bid for Unilever (ULVR) has subsequently encouraged the target to create more value for shareholders through higher dividends, asset sales and share buybacks.
Palm oil producer MP Evans (MPE:AIM) recently fought off a takeover bid and now plans to boost dividends and sell assets, all benefiting shareholders. (DC)
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