The Australian Government is aware of proposals currently being circulated in investment markets relating to BHP Billiton. If these proposals proceeded, BHP Billiton Limited would cease to be listed on the Australian Securities Exchange (ASX) and its assets would be transferred to a new company that, although headquartered in Australia, would be incorporated in England and Wales and listed on the London Stock Exchange (LSE).
The Government welcomes foreign investment in Australia, but it is important that such investment be consistent with the national interest. This includes compliance with foreign investment conditions imposed on investments.
In 2001, the then Treasurer, the Hon Peter Costello, agreed to a merger between BHP Limited and Billiton plc subject to conditions considered necessary to protect the national interest. These conditions, attached in full, include that BHP Limited (now BHP Billiton Limited):
- remain listed on the ASX; and
- remain the ultimate holding company for the businesses it owned prior to the merger as long as they remain part of the combined BHP Billiton group.
These conditions apply indefinitely unless revoked or varied by me. It is clear that the proposals under discussion would not be consistent with these conditions.
BHP Billiton’s Australian roots stretch back to the Broken Hill Proprietary Company which began Australian mining operations in that iconic eponymous outback location in 1885. It opened its head office in Melbourne that same year.
In 1939, the Commonwealth Aircraft Corporation, a BHP led syndicate, provided aircraft essential to the Australian war effort. BHP operations expanded from Broken Hill to Newcastle, Wollongong, Whyalla, the Bass Strait and the Pilbara and beyond our borders through overseas acquisitions.
BHP Billiton’s Australian shares are held by hundreds of thousands of Australians directly, and by millions more through superannuation funds and other investments. The company plays an important role in the Australian economy. The conditions set down by then Treasurer Costello are in Australia’s national interest and remain necessary and appropriate. There is nothing in what I have seen of the proposals to suggest otherwise.
It is unthinkable that any Australian Government could allow this original Big Australian to head offshore.
Should BHP Billiton implement the Elliott Associates proposal contrary to the conditions imposed in 2001, it may commit a criminal offence and could be subject to civil penalties under the Foreign Acquisitions and Takeovers Act 1975 (‘FATA’). If the company is convicted of an offence, the directors could be held personally liable.
Further, a proposal by an LSE listed company to acquire the assets of BHP Billiton Limited would be a significant action under the FATA. Under the FATA, I am able to order that such an acquisition not occur if it is contrary to the national interest.
If an acquisition proceeds without my consent, I would be able to order a divestment of the assets acquired and take court action to enforce this order. The proponents of the acquisition may also be liable to civil and criminal penalties.
ATTACHMENT: Media Release by then Treasurer Costello
Foreign Investment approval of BHP Limited-Billiton Plc Merger
Under the Foreign Acquisitions and Takeovers Act 1975 (the Act) I have approved arrangements for BHP Limited and Billiton Plc as dual listed entities to merge their businesses subject to a number of conditions.
The merger will create one of the world’s largest diversified resources groups, to be known as BHP Billiton. BHP Limited will become BHP Billiton Limited and Billiton Plc will become BHP Billiton Plc.
The proposal involves BHP Limited and Billiton Plc merging their two separate businesses under a dual listed company structure (DLC). Under the DLC structure, BHP Limited and Billiton Plc would operate as if they were a single economic enterprise (with a single management and Board of Directors) while remaining separate legal entities.
The conditions forming part of the approval are contained in the attachment.
The Foreign Investment Review Board (FIRB) recommended that no objections be raised to the proposed merger, subject to a number of conditions designed to ensure that the merger would not be contrary to Australia’s national interest. I accepted the FIRB’s recommendation.
These conditions will ensure the BHP Billiton Group continues a strong Australian focus with its headquarters located in Australia.
4 June 2001
ATTACHMENT: Conditions under Section 25(1A) of the Foreign Acquisitions and Takeovers Act 1975:
- BHP Limited remains an Australian resident company, incorporated under the Corporations Law, that is listed on the Australian Stock Exchange under the name “BHP Limited” and trades under that name;
- BHP Limited remains the ultimate holding company of, and continues to ultimately manage and control the companies conducting the businesses which are presently conducted by the subsidiaries of BHP Limited, including: the Minerals, Petroleum, Steel and Services businesses for so long as those businesses form part of the combined BHP Billiton Group (“the Group”)
- the headquarters of BHP Limited and the global headquarters of the Group are to be in Australia;
- the headquarters of BHP Limited and the global headquarters of the Group are publicly acknowledged as being in Australia in significant public announcements and in all public documents (as that term is defined in section 88A(1)(a) of the Corporations Law);
- that both the Chief Executive Officer of the Group and Chief Financial Officer of BHP Limited have their principal place of residence in Australia;
- the majority of all regularly scheduled Board meetings and Executive Committee meetings of BHP Limited in any calendar year occurs in Australia;
- the Board of directors of BHP Limited is elected in accordance with the procedures notified in the proposal or in accordance with procedures approved by the Treasurer; and
- that if BHP Limited wishes to act differently to these conditions, it seeks and obtains the prior approval of the Treasurer.
Interpretation - For the purposes of these conditions a reference to:
- “BHP Limited” means BHP Limited, ACN 004 028 077, and includes “BHP Billiton Limited” or other name adopted by that corporation;
- Corporations Law (or a provision of that law) includes any re-enactment or substitution of that law (or provision).
- “global headquarters” includes the requirement that both the Chief Executive Officer and the Chief Financial Officer of the dual listed entities (i.e. BHP Limited and Billiton Plc) will be based in Australia and have their principal offices and key supporting functions in Australia. In addition, the centre of administrative and practical management of BHP Limited shall be in Australia and BHP Limited’s corporate head office activities, of the kind presently carried on in Australia, will continue to be carried on in Australia.
BHP Limited must comply with conditions 1, 2, 6 and 8 immediately upon receipt of notice of the decision in accordance with subsection 25(1B) of the Foreign Acquisitions and Takeovers Act 1975 (the Act) and conditions 3, 4, 5 and 7 as soon as practicable after completion of the dual listed merger of BHP Limited and Billiton Plc.
The conditions will have effect indefinitely subject to amendment of the Act or any revocation or amendment by the Treasurer.