Elliott's proposal would put this at risk

BHP Billiton chief executive Andrew McKenzie

Elliott said the USA business does not provide "meaningful diversification" to BHP as a whole and there are no synergies between the US business and the company's mining assets.

"Despite the first-class quality of most of BHP's assets, BHP as an investment has underperformed", Elliott, which manages about $33 billion, said in the letter to the company's board.

Activist shareholder Elliott Advisors on Monday proposed BHP Billiton scrap its dual-company structure in favour of a primary listing in London and a secondary listing in Sydney. The firm said it holds an approximately 4.1% stake in the resources major's London-listed shares.

Elliott said its plan could increase shareholder value by up to 48.6 percent for holders of BHP's Sydney shares and 51 percent for London shareholders.

"If Elliott gets its way and BHP's share price rises as a result, we would not be surprised to see its 4.1% interest disposed of in short order, leaving the company and other shareholders to pick up the pieces".

Elliott's demerger proposal is based on a view that investors would ascribe a higher value for these assets in a separately listed entity, says BHP.

BHP would also demerge its US petroleum assets into an entity to be listed on the New York Stock Exchange and commit to returning excess cash to shareholders.

Forecast: Cooler Than Tuesday, But Still Warm With A Shower Possible
Highs will jump into the middle to upper 70's with mostly sunny skies and highs with a south wind at 10 miles per hour . Highs of 18C (64.4F) are forecast across southern Britain while the north struggles to get much above 13C (55.4F).

BHP said it's been in talks with the hedge fund for many months, and the costs and risks associated with the proposals outweigh the benefits. Hedge funds and other institutional investors own 3.89% of the company's stock.

"The goal is to provide details of the BHP shareholder value unlock plan to all of BHP's shareholders, so that BHP can engage openly with all parties on the plan to unlock shareholder value", Elliott said in the letter.

As you might already be aware, BHP Billiton operates as a dual-listed structure.

"We have laid the foundations for the group to substantially grow the base value of its operations", BHP said in its statement. The average 1 year price objective among brokerages that have issued a report on the stock in the last year is GBX 1,284.10 ($15.95).

"We see the demerger of BHP's Gulf of Mexico assets in combination with the USA onshore petroleum assets as providing a standalone USA petroleum business with consistent cash flow to fund its own further expansion, allowing BHP to increase its focus on its core competencies and also helping the value of BHP's remaining core portfolio to positively re-rate". It pointed to returns of $23 billion in share buybacks, and dividends of $56 billion since the mine operator's dual-listed structure was formed in 2001.

The investment firm is also arguing BHP could buy back shares effectively at a 14% discount by making better use of about $9.7 billion accumulated franking credits, which offset taxes on Australian stock dividends. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium.

'The whole idea of an oil spin-off or de-merger has been around for as long as BHP's had petroleum'. The Iron Ore segment is engaged in mining of iron ore.

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