BHP Billiton Mulls Assets Spinoff

LONDON (The Deal) -- Anglo-Australian mining company BHP Billiton (BHP) on Tuesday signaled the possibility of bundling noncore assets into a demerged business, among other options for divestment and "simplification."

Melbourne-based BHP said it was studying the next phase of the simplification of its portfolio, "including structural options," but any course of action remained "subject to detailed review and an assessment of alternatives." The company said it would "only pursue options that maximize value for BHP Billiton shareholders."

The cautious and carefully worded statement followed speculation in the Australian media that BHP is considering spinning off its nickel, manganese and aluminum businesses into a separate unit. A report in the Australian Financial Review said the demerged company could be worth up to A$20 billion ($18.5 billion).

A spokeswoman for BHP in London declined to go beyond what was in the statement, saying that the company had been looking at options around simplification "for a couple of years" and pointing out that the group has already made divestments in Australia, the U.S., Canada and the U.K., including petroleum, copper, coal, mineral sands, uranium and diamonds assets. She declined to comment on the Australian Financial Review's report that Goldman, Sachs & Co. has been appointed to develop the spinoff proposal.

BHP said: "We believe that a portfolio focused on our major iron ore, copper, coal and petroleum assets would retain the benefits of diversification, generate stronger growth in free cash flow and a superior return on investment. By increasing our focus on these four pillars, with potash as a potential fifth, we will be able to more quickly improve then productivity and performance of our largest businesses."

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