BHP Billiton: Liberum maintains 'sell' after Elliott's plan.

(CercleFinance.com) - Liberum maintains its "sell" rating and target price of 800 pence on BHP Billiton, after the mining giant responded to Elliott's shareholder value unlock plan.


The investment bank says it agrees with BHP's stance that breaking up the business is not a path to long-term value accretion.

In particular, Liberum believes there is no obvious uplift from spinning out petroleum, even though Elliott asserts that the business could be worth around 22 billion dollars.

"The main source of BHP's underperformance has been a combination of weak earnings momentum and financial leverage stemming from its onshore acquisitions, neither of which are helped by Elliot's proposals," it adds.

Liberum thinks BHP's ill-timed acquisitions of Petrohawk and Chesapeake in 2011 probably account for the majority of the share's underperformance.

"This decision can't be rectified by any of the measures put forward by Elliott", the broker says.

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