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Rio Tinto (NYSE:RIO) should scrap its primary London listing and switch its primary listing to Australia, as the miner's current dual corporate structure is a barrier to its strategic plans, activist shareholder Palliser Capital said Thursday.
Rio's (RIO) "extremely clunky and outdated" dual-listed structure prevents it from pursuing all-stock takeovers because of the company's valuation gap and complex corporate governance, Palliser chief investment officer James Smith said in a presentation at the Sohn Hong Kong investment conference, according to the Financial Times.
As a result, Rio Tinto's (RIO) London-listing trades at a $27B discount to its Australian entity, Smith reportedly said in the presentation.
Palliser's position - less than 1% of Rio's (RIO) shares - is the fund's largest and worth a few hundred million pounds, according to the report.
Smith, Palliser's founder, previously was head of Elliott Management's Hong Kong office, where he oversaw a similar campaign focused on BHP, which switched its primary listing to Sydney two years ago.
Barclays analysts have said Rio Tinto (RIO) collapsing the dual-listed structure "appears a low probability event to us... however, we don't see any insurmountable technical barriers to unification, [and] there would be a number of benefits."