BHP Billiton to return $10.4 billion to shareholders

After it faced criticism from activists to improve returns to shareholders. 

BHP Billiton, the world’s biggest mining company by market value, plans to return $10.4 billion (R152.4 billion) to its shareholders through the combination of an off-market share buy-back and a special dividend, the company announced on Thursday. 

The move comes after the company announced on Wednesday that it has finalised the sale of its U.S. onshore oil and natural gas assets for $10.5 billion. 

The JSE-listed and Melbourne-based company said it planned to buy back shares worth $5.2 billion (R76.1 billion) at up to a 14 percent discount.  It will use the proceeds from the onshore oil and natural gas assets to reward shareholders in the form of a special dividend totaling $5.2 billion (R76.1 billion). 

BHP Billiton said the capital-management program would begin immediately.

“We made a commitment that all the net proceeds from the disposal of our Onshore US assets would be returned to shareholders and we are honouring that commitment now that the sale transactions have been completed,” Andrew Mackenzie, the CEO of BHP Billiton, said in a statement. 

According to The Wall Street Journal, BHP Billiton has faced pressure from activist investor Elliott Management Corporation to improve returns to shareholders.  

Returning US$10.4 billion through the combination of an off-market share buy-back and a special dividend will bring the total cash returned to shareholders to US$21 billion (R307.6 billion) over the last two years, said Andrew.  

“Consistent with our Capital Allocation Framework, the Board has carefully considered how best to return the net proceeds to our shareholders. We believe that the off-market buy-back and special dividend program announced today will return significant value to all our shareholders, allowing the entire BHP global shareholder base to participate, both directly and indirectly, in the shareholder return program,” said Ken MacKenzie, the BHP Billiton chairman.