Activist investor Elliott Advisors has called BHP Billiton's response to its plans to shake up the company's structure "dismissive and premature" after the miner yesterday said its costs offset any benefits.
"We had thought that our earlier meetings with management were constructive. BHP should embrace a broadening of the discussion to include all shareholders," the hedge fund said.
"Given the plan’s potential to unlock up to $46bn in value, we and no doubt other shareholders of BHP, look forward to management providing a more thorough and reasoned assessment of the plan."
After reviewing the proposal yesterday, BHP said: "The costs and associated risks of Elliott's proposal would significantly outweigh any potential benefits".
Elliott said its plan would unlock shareholder value by unifying its dual listing structure, spinning off its US oil arm and revising its capital return policy.
Earlier today, the Australian government appeared to side with BHP, saying any significant changes to the corporate structure needs to be consistent with a "national interest" test under the law.
"A change in the corporate structure and listing arrangement would need to be carefully considered against the provisions of the Foreign Acquisitions and Takeovers Act," a spokesperson for Australian Treasurer Scott Morrison said.
If the changes were significant they would need to be consistent with Australia’s national interest test under that Act.
The Australian government approved the merger of Melbourne-based BHP and London's Billiton back in 2001 on the basis of conditions that kept the mining giant closely tied to Australia.
Elliott, which holds about 4.1 per cent of BHP's London-listed shares, said the miner could increase value attributable to shareholdings of up to 48.6 per cent for investors in the company's Sydney stock and 51 per cent for London shareholders.
The hedge fund also has rights to acquire an interest of up to 0.4 per cent in BHP's Australian-listed arm.
Elliott's proposal argued BHP should be an Australia-headquartered firm paying Australian taxes to eliminate the trading value mismatch between the two lines of shares and optimise the value impact of share buybacks.
The group also proposed spinning off BHP's US oil and petroleum arm into a separate listing on the New York Stock Exchange, estimating its value at around $22bn (£17.7bn)
Elliott said BHP is expected to generate $31bn of excess cashflow in the next five years, but it has previously used excess cash to make "value-destructive" acquisitions.