On Wednesday night, Australian time, BHP Billiton Limited (ASX: BHP) shareholders overwhelmingly approved a de-merger of some of the company's assets into a new company to be named South32. We've written extensively about the proposal, and I've summarised some of the key points below from a previous article, but investors considering investing in BHP post demerger needs to understand the assets under its control before buying or holding.
South32's Assets
I covered in a previous article South32's assets after the demerger. You can go here to read that article.
BHP's Assets
Following the demerger, the slimmed down BHP will have operations in just 8 countries compared with the current 13; 19 assets compared to the current 41, and 12 operated assets compared to the current 20.
The beauty of this is that the assets owned by each company will be given the attention they deserve, potentially allowing some smaller assets to shine in their own right.
So, here are BHP's 19 Assets:
Petroleum and Potash
- North West Shelf Australia
- Jansen project Canada
- Pyrenees Australia
- Macedon Australia
- Bass Strait Australia
- Onshore US United States
- Angostura Trinidad & Tobago
- Shenzi United States
- Atlantis United States
- Mad Dog United States
Iron Ore
- Western Australia Iron Ore
- Samarco Brazil
Coal
- Queensland Coal Australia
- NSW Energy Coal Australia
- Cerrejón Colombia
Copper
- Olympic Dam Australia
- Escondida Chile
- Pampa Norte Chile
- Antamina Peru
Could BHP Outperform?
A UBS study found that over the 12 months following separation, the demerged company outperformed the market return by 10.7% and outperformed the parent entities by 8.5% (22 demergers since 1997). Additionally, a CIMB Group study found that the demerged group's share price rose an average of 9.5% per annum following separation (17 demergers since 2002).
The problem for both BHP and its offshoot South32, compared to say Amcor Limited (ASX: AMC) and Orora Ltd (ASX: ORA), is that their share prices will be heavily influenced by global commodities prices, some of which have crashed over the last 12 months!
