Resources giant BHP Billiton has dismissed the proposal by hedge fund Elliott Advisors to significantly restructure its business, saying the plan has major flaws and would not benefit shareholders.
"The costs and associated disadvantages of each element of Elliott's proposal would significantly outweigh the potential benefits," chief executive officer Andrew Mackenzie told investors on Wednesday.
"We have concluded that Elliott's proposal would not be in the long-term interest of shareholders."
New York-based Elliott on Monday launched a public campaign urging BHP's board to improve returns by merging the UK and Australian entities into a single Australian-headquartered and London-listed company.
It also urged the miner to spin off its US petroleum business for listing on the New York share market and to return more cash to shareholders through buybacks.
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The world's biggest miner rebuffed the suggestions in an initial statement on Monday, and has now released a more detailed response.
Chief financial officer Peter Beaven said the company's dual-listing in Sydney and London has not been a constraint for business, and in fact allowed efficient use of franking credits and provided flexibility to buy back shares at the lowest price.
He estimated unifying the dual-listed structure could destroy at least $US1.3 billion in value, while saving less than $US2.5 billion a year, and said this would also go against the legal requirements of Australia's Foreign Investment Review Board.
The miner also stepped up its defence for retaining petroleum assets in the main company, saying this provided significant diversification benefits through high margins and cash flow stability and lower cost of capital for the business.
"Petroleum remains core to the BHP Billiton strategy and has the potential to create significant long term value at high returns," Mr Mackenzie said.
BHP also backed its track record for returning capital to shareholders through buybacks and dividends, saying its current focus on balance sheet strength is the appropriate strategy at this point in the commodities cycle.
Ellliott claims to hold 4.1 per cent of BHP's UK-listed stock and rights for another 0.4 per cent of the Sydney-listed BHP Billiton shares.
The activist fund, with assets under management worth nearly $US33 billion ($A43 billion), has pushed for change at other major global corporate groups in recent months, including Samsung Electronics, chemicals major AkzoNobel and drinks group SAB Miller.
BHP's ASX-listed shares dropped nine cents to $25.32.
