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By Joice Alves
LONDON, Aug 17 (Reuters) - London's FTSE 100 index will lose
its second largest company by market capitalisation if
shareholders back plans by global resource giant BHP Group
to end its dual listing structure and make
Australia its primary stock market.
BHP has previously come under pressure from some
shareholders, notably activist investor Elliott Advisors, to
simplify its structure, but had said any gains would be less
than the cost of change.
Now the discount of London-listed stocks is at its deepest
in more than three decades, BHP, which on Tuesday reported its
best annual profit in nearly a decade, said it planned to get
rid of its London listing.
Shareholders are expected to vote on the unification at
meetings in the first half of 2022.
If the plan gets board and shareholder approval, the London
Stock Exchange will lose a major player. BHP has 128 billion
pounds ($176.22 billion) in market cap, second only to
AstraZeneca with around 131 billion pounds, Refinitiv
data shows.
BHP is the biggest company by market capitalisation on the
Australian stock exchange.
The value of British stocks versus global peers has been
depressed by the combined impact of Britain's departure from the
European Union, a weak pound and a lack of tech stocks, which
have been the big beneficiaries of the disruption caused by the
pandemic.
London-listed shares are trading at 12.6 times
forward earnings, that compares to 17.3 times for the Australian
benchmark.
Following news of the plan to end the London listing, BHP's
London shares rose 6% by 1352 GMT, outperforming the wider
market.
Jamie Maddock, equity research analyst at Quilter Cheviot,
said BHP's departure is bad news for UK-focused investors as
country index trackers would be forced to sell their shares. The
move would also reduce significantly London's exposure to the
mining sector.
David Madden, market analyst at Equiti Capital in London
said the London stock market would still be attractive and noted
it has attracted a surge of initial public offerings this year.
"The London Stock Exchange’s deep liquidity pool will ensure
it remains popular for listings", he said.
Last year, consumer brands company Unilever, which
like BHP had a dual-listing, merged its Dutch and British
corporate entities and Unilever NV's Amsterdam-listed shares
ceased trading.
($1 = 0.7264 pounds)
(Reporting by Joice Alves; editing by Barbara Lewis)
