NEW YORK (TheStreet) -- Shares of BHP Billiton (BHP) are down -3.04% to $70.55 in pre-market trade after the mining company announced plans to spin off businesses worth an estimated $16 billion, most of them acquired in a 2001 merger, to focus on its most profitable activities, Reuters reports.
But it held off on a share buyback, disappointing investors who had hoped to receive around $5 billion.
CEO Andrew Mackenzie said the widely expected move to simplify BHP around the "four pillars" of iron ore, copper, coal and petroleum - with potash as a potential fifth pillar - would spur cash flow growth and boost returns, according to Reuters.
Must Read: Warren Buffett's 25 Favorite StocksSTOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. These assets generated 96% of the group's underlying core profit in the 2014 financial year. The spin-off company, called NewCo for now, will bundle BHP's aluminium, manganese, Cerro Matoso nickel in Colombia, South African energy coal, some Australian metallurgical coal assets and the Cannington silver, lead and zinc mine. For more on BHP's spin-off plans, click the video below:
WATCH: More market update videos on TheStreet TV | More videos from Ruben Ramirez BHP confirmed the spin-off as it reported an 8% increase in second half underlying attributable profit to $5.69 billion due to higher output volume and cost cuts. The figure was just below a consensus analyst forecast of $5.94 billion, according to Thomson Reuters Starmine's SmartEstimate. Some analysts and investors saw the fall in BHP shares today as an over-reaction. BHP data by YCharts EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.