In the wake of BHP Billiton Limited
(ASX:BHP) flagging the potential divestment of its non-core assets into a new resources company fund managers have weighed in on the hype.
Pengana Global Resources Fund, Portfolio Manager Tim Schroeders told FNN the deal should be on the table but the devil is in the detail in terms of what price BHP can achieve.
Mr Schroeders has put a less than 50 per cent chance on the likelihood of the deal going through and says the latest announcement has not changed his valuations on the stock.
Pengana Global Resources Fund has a price target on BHP at a little more than $41, compared to a closing price of $37.05 after the announcement was made.
BHP’s announcement flagged the creation of a portfolio focused on its major iron ore, copper, coal and petroleum assets. The miner says the portfolio would retain the benefits of diversification, generate stronger growth in free cash flow and a superior return on investment.
While the company says it will continue to actively study the next phase of simplification, including structural options, it has vowed to only pursue options that maximise value.
BHP Billiton reported a net profit of $9.9 billion in the first half of the 2014 financial year.
