Activist Palliser Refreshes Call for Rio Tinto to Unify Dual Listing -- Update

By Rhiannon Hoyle

Activist investor Palliser Capital is calling for an independent review of Rio Tinto's dual listing in London and Sydney, insisting it makes more sense for the mining giant to unify its corporate structure in Australia.

In a letter to Rio Tinto's board on Wednesday, the U.K.-based hedge fund said Rio Tinto's dual-listed structure "has proved to be an unmitigated failure for shareholders and requires urgent unification into a single Australian-domiciled holding company."

The miner's chief executive, Jakob Stausholm, in July said Rio Tinto wouldn't unify as an Australian company following a call two months earlier by Palliser to do so. Stausholm said then that the company's own review concluded changing the structure would destroy value for shareholders.

Palliser, which said it has a substantial investment in Rio Tinto, rejects that view. "Based on our extensive analysis, we believe that this readily actionable step would resolve the value destructive inefficiencies of the outdated DLC structure and present a path to $28 billion (27%) upside in the near term for PLC shareholders and further upside for the combined group over the medium term," it said in Wednesday's letter.

Rio Tinto is one of Palliser's largest public equity positions, according to the letter.

BHP, the world's top miner by market value, dropped its own primary listing in London in 2022 to unify its corporate structure in Australia.

BHP's unification is touted by Palliser as a success. But Stausholm has previously said the two cases are incomparable, because BHP's shares were mostly owned in Australia whereas most of Rio Tinto's stock is held in London.

According to Palliser, the current structure makes it hard for Rio Tinto to agree to stock-based mergers and acquisitions--although Stausholm has also previously refuted that idea. It also means so-called franking credits, a type of tax credit in Australia, are used inefficiently, Palliser said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

December 04, 2024 02:46 ET (07:46 GMT)

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