- A potential spinoff of BHP Billiton's (BHP +0.2%) most unloved assets - likely including its nickel, manganese and aluminum operations - probably would not boost profit at either the new or old entity, as profit margins for the unfavored business have evaporated at the bottom of the commodity cycle, according to a Bloomberg analysis.
- CLSA Asia-Pacific Markets says such a spun-off company may be valued at $7.5B, just 4% of BHP’s market value.
- BHP now trades at ~6.6x analysts’ EBITDA forecasts for the year ending in June, a spun-off entity would have to command a multiple of more than 9x to generate value for shareholders, a J.P. Morgan analyst calculates - "a bit too ambitious," he says.