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Billiton shareholders approve BHP merger

Billiton shareholders approve BHP merger

Shareholders in mining company Billiton Plc on Tuesday approved its proposed US$32 billion merger with Australia's BHP Ltd, which would create the world's biggest diversified minerals firm.

Billiton said 91.5 percent of the votes cast were in favour of the deal, which had been expected to be approved despite some opposition to executive payments tied to the merger resolution.

More than 50 percent of Billiton's shares were represented in the vote.

BHP investors vote on the deal on Friday in Australia, where it has been given a rougher ride. They have questioned the disclosure of financial information about the merger and the fact that BHP would hold only a 58 percent stake in the new group - compared with some valuations that its stake should be around 65 percent.

BHP shareholders have also expressed worries that the company will move its base to Britain and lose its Australian identity, despite assurances that Melbourne will remain its headquarters, with a corporate management centre in London.

Billiton's shares ended up 1.9 percent at 359-1/4 pence. They have outperformed their sector peers by about 14 percent so far this year and outstripped the FTSE by nearly 47 percent over the same period, according to Reuters data.

The merged group would retain a dual listing in London and Australia - similar to the arrangement by rival Rio Tinto Ltd/Plc - and have interests in aluminium, chrome, copper, iron ore, natural gas and oil.

It would also continue to be quoted in South Africa, where Billiton traces its roots and still has major interests.

Under the merger plan, Billiton chairman and chief executive Brian Gilbertson would become deputy chief executive of the combined group and chief executive from the end of next year.

He said the merger was a good deal for Billiton and that he believed BHP investors would back it too.

"I feel confident that this is a transaction that (BHP) shareholders will give their support to. It creates the finest combination of assets in our industry that I can conceive of," he told Reuters.

"It locates as an Australian company, a truly international company, one with exciting global projects and initiatives, so I'd be surprised if they don't come on board strongly."

OBJECTIONS

Corporate governance groups have criticised Billiton's combination of the merger proposal with one triggering executive payments totalling 14.2 million shares, worth about 51 million pounds ($72 million). They would otherwise have been awarded only if Billiton had been subject to a full takeover or once it had met outperformance targets over a period of time.

The biggest beneficiary will be Gilbertson, who is entitled to 1.44 million share options, worth more than five million pounds.

The total vote on the merger resolution was a couple of percent lower than another on the structure of the new company, indicating that some shareholders had followed the advice of the Pensions Investment Research Consultants (PIRC) to abstain.

PIRC, which provides advice to institutions with about 350 billion pounds of investments, objected to the bundling of the merger resolution to changes in the incentive bonuses.

"In spite of statements to the contrary, it would appear that executives are being rewarded for completing a transaction rather than fulfilling previously disclosed performance criteria," PIRC said in a report ahead of the vote.

One retail investor who attended the shareholders' meeting on Tuesday said he had voted in favour of the merger, but was dismayed that the bonuses were being paid.

"It's a racket. You can't vote in favour of the merger but against the bonus," he said. He declined to be identified but said he owned a few thousand Billiton shares.

"I am in favour of incentives, you have to motivate (the executives), but you have to play by results, not just a deal," he said, but added that he had been pleased with Billiton's performance.

"I'm quite happy with the company as it is, but I suppose the merger makes sense. At least it's a partnership, not a takeover." ($1=.7037 Pound).


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