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Elliott Management Urges BHP To Immediately Review Dual Structure

Activist investor Elliott Management Corp. urged BHP Billiton Ltd. (BHP.AX,BLT.L,BBL,BHP) to immediately review its dual structure after commissioning research that argues reorganizing as a single company in Australia would add more than $22 billion in value to BHP's shareholders.

In a letter sent today, Elliott called on BHP Chairman Ken MacKenzie and the Board of Directors to publicly commit - by the date of announcement of the company's half-year results on February 20th - to undertake a full, independent and transparent review of unification at BHP.

"Elliott is encouraged by the increase in focus on shareholder value at BHP in recent months. Those efforts include a refreshed Board, the intention to exit the U.S. Onshore assets, a commitment to delay further expansion of the Jansen Potash project, a more rigorous approach to capital allocation, and a greater commitment to listen to shareholders and to provide the market with thorough analysis of important issues," Elliott said.

According to the report by FTI Consulting Inc, Creating a unified company, headquartered and incorporated in Australia, with a primary listing in that country and additional listings elsewhere, would cost $391 million. BHP currently operates as two entities based in Melbourne and London.

Elliott also noted in the letter that unification is an important gateway for BHP to make the most of other value initiatives - such as future demergers of assets, which have attracted recent market commentary and would be made simpler under a unified BHP.

Given the magnitude of the value release opportunity of over US$22 billion outlined in the Independent Report, as well as the other benefits of unification, Elliott said it believes that the next logical step is for the Chairman and Board to now turn their attention to undertaking a full, independent and transparent review of unification at BHP.

The Independent Report also demonstrates that with BHP's income and cash position strengthening - through the positive commodities and business cycle and the potential cash proceeds from the disposal of BHP's U.S. Onshore assets - unification would significantly help BHP to optimize the value impact of dividends and share buybacks.

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