Activist investor Palliser Capital demanded Rio Tinto (NYSE: RIO) scrap its primary listing in London and unify its corporate structure in Australia, saying about $50 billion in shareholder value has already been lost due to the dual listing.
UK-based Palliser in a strongly worded letter to the iron ore giant’s board said on Wednesday that doing away with the “outdated” dual listing structure would unlock $28 billion in value to London shareholders in the near term and additional value for the combined group in the medium term.
“We implore the Board to act swiftly to stop the clock on further value destruction for shareholders in the hands of a structure that is unfit for the corporate world of today,” the hedge fund said.
It has demanded an independent, comprehensive, and transparent review by the miner’s board into the rationale for maintaining a corporate structure that it says every other large company has moved on from.
Rio Tinto (NYSE: RIO), the world’s biggest iron ore producer, did not immediately respond to a Reuters request for comment.
The miner’s inability to carry out stock-based mergers and acquisitions has cost shareholders an estimated $35.6 billion since the dual structure was implemented three decades ago, Palliser further stated in its letter.
“Rio Tinto’s approach to M&A (mergers and acquisitions) is both an obvious statistical anomaly and entirely unsustainable going forward,” the activist investor said.
Palliser also gave BHP’s example, which scrapped its dual listing in favor of its main listing in Sydney in 2022, and said a unified Rio Tinto would trade up to and ultimately surpass its current price, which closed at A$120.08 ($77.30) per share on Wednesday.
The London-listed stock ended at 50.20 pounds ($63.68) on Tuesday.
($1 = 1.5535 Australian dollars)
($1 = 0.7883 pounds)
