BHP Billiton To Spin Off Assets Into Independent Global Company

By Sarah Price - 19 Aug '14 08:52AM

BHP Billiton, the metal and petroleum company, announced Tuesday that it will spin off some of its assets into a separate independent global unit to streamline its business.

BHP said that the new company will take care of its "aluminium and manganese businesses and the Cerro Matoso Nickel, Energy Coal South Africa, Illawarra Metallurgical Coal and Cannington Silver-Lead-Zinc mines."

The new company will be listed on Australia's stock exchange and will also have a secondary listing on the Johannesburg Stock Exchange. The new company will be worth at least $14 billion.

The demerger will help BHP concentrate better on "its exceptionally large, long-life iron ore, copper, coal, petroleum and potash basins," which will help it operate better and generate greater revenue and shareholder value.

BHP also announced that David Crawford, a board member will retire from the BHP board to lead the new company, which is yet to be named.

Graham Kerr, BHP's CFO will reportedly take up the role of CEO and Brendan Harris, Head of Investor Relations, would assume the position of Chief Financial Officer in the new company.

The proposal, however, needs to be reviewed by the shareholders and is subject to regulatory approval.

"For over a century, BHP Billiton has progressively reshaped its business to maintain its industry leadership. We believe the proposed demerger, if implemented, will accelerate the simplification of the Group's portfolio, provide investors with choice and unlock value in both companies. Our shareholders will have the opportunity to vote on this proposal once the necessary approvals are in place," Jac Nasser, chairman of BHP said in a statement.

"In a single step, we will significantly increase BHP Billiton's focus on the exceptionally large resource basins that underpin its competitive advantage. As we move towards a simpler portfolio, comprised of our pillars of Iron Ore, Copper, Coal, Petroleum and potentially Potash, we will become a higher-margin, higher-return business," he added.

BHP also said that its annual revenue for the period ended June rose 23 percent. The company amassed a net profit of $13.83 billion, MarketWatch reports.