BHP Billiton Limited ADR (NYSE:BHP), a diversified mining corporation, on August 15, 2014, disclosed that it would prefer a demerger of its manganese, aluminum and nickel assets. Sources have it that the company might start its separate business that would be worth around $12 billion.

BHP Billiton Limited ADR (NYSE:BHP) further said that the company’s board of directors is looking forward to a spin-off before the annual earnings reports’ announcement. According to a newspaper company, based in Australia, BHP Billiton Limited ADR (NYSE:BHP) is making plans and strategies to sell its Nickel West business.

BHP Billiton Limited ADR (NYSE:BHP), during a meeting with the representatives of the Australian newspaper, said that the company wants to demerge its assets combination. The biggest mining company of the world currently has a market capitalization of $185 billion.

The company has been trying to sell its nickel, aluminum and manganese assets for quite some time now, for these assets do not contribute much to the earnings of the company. BHP Billiton Limited ADR (NYSE:BHP) further said that the cash flow and ROE of the company will improve once it simplifies the company.

According to the news, some of the biggest stock holders of BHP Billiton Limited ADR (NYSE:BHP) welcomed the news of a demerger.

Fidelity Global Industrials Fund’s portfolio manager, Christopher Moore, commented that this decision of the company reassures the stockholders that they are in good hands as it means that the company focuses more on its earnings rather than keeping unnecessary assets tied with it.

He further said that he would expect other mining companies to follow suit.

The competitors of BHP Billiton Limited ADR (NYSE:BHP), Rio Tinto and Anglo American, said that they would try to increase their profits from those areas of their portfolios that deliver the highest returns.

According to the market analysts, BHP Billiton Limited ADR (NYSE:BHP) will have around $1 to $2.5 billion of its debt on the new vehicle. The analysts also admired this step of the company as handling non-profitable assets of the company can be quite challenging, especially in this ever changing market situation.

Amhen Investment Management’s portfolio manager, Neil Boyd-Clark, who has some shares in BHP Billiton Limited ADR (NYSE:BHP), said that the sale of invaluable assets of the company will crystallize the company’s value in the market.

Moreover, AFR- the Australian Financial Review- disclosed that the separate company will be worth $14 billion and it would include the assets of manganese, aluminum, silver mines of Cannigton, nickel, and coal assets of South African region. According to market analysts the value of the new company will be around $12 billion to $23 billion.

According to AFR, the separate company will have an Australian listing and the CFO of BHP Billiton Limited ADR (NYSE:BHP) will lead it.

Coming to the stock prices of BHP Billiton Limited ADR (NYSE:BHP), the company, on the last trade day, started its stocks at a price of $72.53 and closed at a price of $72.45, after hitting the highest figures of $72.59. The company has a price to earnings ratio of 12.98.

 

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