How investors are preparing for a unified BHP

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How investors are preparing for a unified BHP
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BHP shareholders will vote on the miner’s proposed unification on Thursday, which, if approved, will have ramifications for investors everywhere.

before trading opened on January 31 if the proposal was approved, despite concerns that such a move could instigate volatility.P estimated that BHP’s increased weighting would trigger buying of $10.8 billion of the stock, or about 34 days of volume, as passive investors scramble to comply with index-linked mandates and active managers try to maintain the relative size of their positions in the miner.

However, the proposal implies that both shares are of equal value: holders of Plc stock will have their shares swapped on a one-for-one basis for Australian shares. Investors will also have to consider that the benchmark’s materials sector will increase by about 3 per cent or 4 per cent, which would see the dominant financial sector lose about 1 per cent in turn.

on the other hand, agrees that the dual-listed structure is outdated, as does Unisuper and K2 Asset Management. Morningstar recommended investors vote in favour of the deal, as have proxy advisers ISS Governance and CGI Glass Lewis.The miner adheres to both Australian and UK corporation laws and therefore must duplicate many functions, including having two boards, holding separate AGMs, and producing two annual reports.

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