BHP Group’s (BHP) board has approved proposals to scrap its dual-listed share structure, and leave the FTSE 100 ahead of a shareholder vote next month.
The miner announced plans in August to move its primary base to Sydney, after 20 years of being listed in the Australia and UK.
The decision is motivated by the potential cost reduction benefits from unification, alongside a drop in earnings contributions from UK assets.
Laith Khalaf, head of investment analysis at A.J Bell, told City A.M. that the decision will be a blow to UK investors and that BHP will take time to adapt to its new market situation.
He said: “I suspect few investors will rue BHP’s exit from the FTSE 100. The index is well known for being heavily cyclical and so one less mining giant in the constituent list is going to help correct this tilt a bit. Investors who still want exposure to BHP will still be able to get it through funds that track the Australian market, and while in the short term BHP may suffer from some negative price action as UK portfolios are realigned, after a period of adjustment this should filter out of the equation.”
It expects to complete the move following regulatory clearance and votes for both companies – BHP Group Ltd and BHP Group Plc on January 20.
The two groups operate as a unified economic entity with a common board and management, and shares in Limited and Plc carry equivalent voting and economic rights.
BHP will leave the FTSE 100 and instead shift to a standard listing on the London Stock Exchange, where it is currently the second-largest company.
Its shares will also continue to be traded on the Johannesburg and New York bourses.
BHP chief executive, Mike Henry said: “A unified corporate structure will make BHP simpler and more agile, with the strategic flexibility required to shape our portfolio to deliver value through producing the commodities needed for continued economic growth, improved living standards, electrification and decarbonisation.”
The decision follows recent trends, with Shell scrapping its dual-share structure but choosing to move the firm’s headquarters to the UK.
Despite the blow, the company’s shares are up 0.43 per cent on the FTSE 100 at 1315 GMT on Thursday.