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BHP returns home as unification gets shareholder nod

BHP

BHP shareholders have voted in favour of the company’s unification meaning the company will cease trading on the Financial Times Stock Exchange 100 (FTSE 100). 

More than 96 per cent of BHP shareholders supported the move at a general meeting on Thursday, which will see BHP combine its dual companies, BHP Group Limited in Australia and BHP Group Plc in the United Kingdom, under the one banner, BHP Group Limited. 

Under a scheme of arrangement, the unification still needs to undergo final legal formalities, including court sanction in the UK. Once the court sanction hearing takes place on January 25, it is expected Australian and UK stocks will be consolidated by January 31.  

Speaking at Thursday’s general meeting, BHP chairman Ken MacKenzie said now was the right time to unify the major miner. 

“As an organisation, we value simplicity and having two parent companies listed in two locations is complex and managing them requires significant management time and focus,” he said. 

“In addition, over time, the makeup of our organisation has changed. We are not the same group we were in 2001. When the DLC (dual-listed company) was first established in 2001, about 40 per cent of the earnings were generated through the UK Plc entity. Due to changes to our portfolio over the years, this is now down below 5 per cent today.” 

The unification of a company is an expensive exercise. However, the costs have come down in recent times – another reason BHP is making the move. 

“Today, one-off unification costs have come down substantially – by approximately 1.2 billion US dollars since 2017. These are now expected to range between 350 to 450 million US dollars,” MacKenzie said. 

“Under the proposed structure, a significant part of these unification costs relate to stamp duties to be paid by BHP for the purchase of Plc shares. 

“As a result, our most recent review of the DLC concluded that now was the right time to unify facilitating a corporate structure that better supports the BHP of today and the BHP of tomorrow, and the value that will be delivered for our shareholders and stakeholders as a result.” 

While BHP will be removed from the FTSE 100 (which comprises the top 100 blue-chip stocks on the London Stock Exchange (LSE)), the company will continue to have a standard listing on the LSE. 

BHP will also continue to have a secondary listing on the Johannesburg Stock Exchange and a Level 2 ADR (American depositary receipt) on the New York Stock Exchange. 

BHP also announced its half-year results for July to December 2021 this week, recording near-record production at its Western Australia Iron Ore (WAIO) operations across the six months. 

WAIO produced approximately 127 million tonnes (144 million tonnes on 100 per cent basis) from July to December 2021, while BHP’s overall iron ore production was 129,401 million tonnes for the December half of 2021 – a 1 per cent increase from the same timeframe in 2020. 

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