Down in London, page-8

We are in for a choppy day tomorrow, IMO.

http://blogs.wsj.com/corporate-inte...-billiton-demerger-disappoints-u-k-investors/
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A technical snafu delayed BHP Billiton BHP.AU +1.35% PLC’s full-year earnings announcement on Tuesday. But investors seem to have decided the results weren’t worth waiting for.
London-listed shares in the world’s largest miner by market capitalization fell 3.5%, the immediate cause of disappointment being the absence of any plan to return cash to shareholders through a share buyback despite a 23% rise in net profit to $13.8 billion. Chatter in the market had focused on the possibility of a cash return of at least $3 billion.
Adding to the sense of grievance may be a wrinkle in BHP’s plans to split some of its assets [LINK: http://online.wsj.com/articles/bhp-billiton-to-spin-off-some-assets-1408433062], including its aluminum and manganese businesses, into a new company.
BHP, whose shares trade on the Sydney and London stock exchanges, had flagged the spin-off but Tuesday said the new company will have its stock-market listing in Sydney.
That doesn’t seem to do BHP’s London shareholders many favors.
True, both sets of investors will get a stake in the NewCo via what BHP describes as “an in-specie distribution of shares in the new listed company on a pro-rata basis.” BHP’s aim all along has been to treat shareholders in its Australian listing – BHP Billiton Ltd.BLT.LN -4.26% – and its U.K. listing – BHP Billiton PLC — equally.
Ostensibly, the ‘pro-rata’ element of the share distribution does just that.
But will U.K.-based fund managers really want to hold shares in a company whose shares mostly trade while they are asleep and whose assets are mostly based in Australia and South Africa?
Some, as analysts at Citi point out, may have investment mandates that prevent them from owning overseas stocks, instantly creating an overhang on the new company’s share price.
Shareholders in the U.K.-listed stock might have preferred a share buyback as compensation, rather than a stake in the yet-to-be-named NewCo.
Easier said than done, of course. By determining the size of a buyback, BHP would effectively put a value on the NewCo ahead of time rather than letting investors decide.