BHP Billiton Works With Goldman Sachs on Elliott Defense

  • Largest miner taps advice after calls from activist investor
  • Elliott seeks U.S. oil asset spinoff, higher capital returns

BHP Billiton Dismisses Elliot Capital's Proposal

BHP Billiton Ltd., the largest mining company, is working with Goldman Sachs Group Inc. as it responds to activist investor Elliott Management Corp.’s calls for strategy changes, according to people with knowledge of the matter.

The Wall Street bank has been providing advice to BHP Billiton since hedge fund billionaire Paul Singer’s Elliott Management approached the Melbourne-based company several months ago, said the people, who asked not to be identified because the information is private.

Elliott on Monday issued a 10-page letter to BHP Billiton seeking a spinoff of the miner’s estimated $22 billion of U.S. oil assets, higher returns for investors and changes to its corporate structure. The mining company said the same day it’s been in talks with the hedge fund for many months, and the costs and risks associated with the proposals outweigh the benefits.

Goldman Sachs was one of BHP’s two main advisers on its 2008 hostile takeover bid for Rio Tinto Group, an all-stock offer which was worth as much as $194 billion at one point. It was also the lead bank that worked on BHP’s 2015 spinoff of South32 Ltd., a producer of aluminum, coal and manganese that now has a market value of about $12 billion.

The New York-based firm ranked third among advisers on acquisitions involving Australian companies last year, trailing only Macquarie Group Ltd. and UBS Group AG, according to data compiled by Bloomberg. That’s up from ninth place in 2015, the data show. 

BHP declined to comment in an emailed statement, while a spokeswoman for Goldman Sachs declined to comment.

Goldman Sachs advised Australian port operator Asciano Ltd. last year on a transaction which saw its assets carved up by investment firms including Brookfield Asset Management Inc. and Global Infrastructure Partners. It also worked with Brisbane-based betting and lotteries firm Tatts Group Ltd. on its A$6.4 billion ($4.8 billion) sale to rival Tabcorp Holdings Ltd.

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