Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
BHP is the latest target for activist investors
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)
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Big News
- JD Sports is a knock-out performer
- FCA cracks down on market abuse
- Mothercare success likely to be shortlived
- Why Motif Bio’s share price could jump soon
- BHP is the latest target for activist investors
- Sepura deal under UK regulatory spotlight
- Royal Dutch Shell faces bribery allegations
- Robert Walters lifted by City jobs boost
- Still time to enjoy the rally in US stocks