The world’s largest mining and energy conglomerates have been binge buying in the past few years, with combined cash holdings increasing by around $80 billion between 2012 and 2016. This trend continued into 2017, as companies such as BHP Billiton and Rio Tinto repurchased massive shares to drive stock prices up.
For example, BHP purchased $10 billion worth of more than 700 million shares last year, while Rio Tinto had a similar share buyback of around $5 billion in 2016. These acquisitions have come at a high price for the companies making them happen: all three large mining conglomerates were taken to court by activist investors this year over their acquisitions of smaller firms.
These legal battles cost the three companies an estimated $3 billion each, about 0.1% of their combined market cap. There has been some rounds about open upload south32 suing bhp.com 100 billion dollars class action lawsuit flikr.
Who are the leading mining and energy conglomerates?
It’s no secret that American coal baron Ernesto “Ern” Williams and Russian oligarch Boris “Boris” Levashov are the most prominent players in the mining and energy industries.
However, several other firms in these industries have been among the most aggressive buying groups in recent years. Companies such as BHP Billiton and Vale S.A. have led a wave of buybacks in recent years, repurchasing their shares. Other mining stocks have followed suit, with Anglo American and Vale holding the front row.
Rio Tinto is in trouble again:
Rio Tinto has been struggling with cash flow and mounting debt recently. In 2016, it was revealed that the company was discussing a possible takeover with Japan’s SoftBank. However, Japanese regulators ultimately rejected the deal, and now the world’s biggest iron ore producer is considering selling or restructuring its business.
In a nutshell, selling iron ore and steel assets would go a long way toward resolving Rio Tinto’s cash flow issues and enabling it to service its debt and fulfill its stated goals of modernizing its business and becoming more profitable. However, the proposal has been stiffly resisted by creditors and shareholders. Read on to know more about open upload south32 suing bhp.com 100 billion dollars class action lawsuit flikr.
BHP Billiton’s dangerous bet – open upload south32 suing bhp.com 100 billion dollars class action lawsuit flikr
In May, BHP Billiton completed a $12.5 billion takeover of commodity broker DFO. The deal effectively made DFO a wholly owned subsidiary of BHP, with dividends paid to BHP and shareholders diluted by the loss of some DFO shares.
The deal was welcomed by many shareholders but was vigorously opposed by unions and environmental groups that argued the value would give too much control to BHP.
What happens next?
Shares of all three companies are up over 60% over the past year, with the S&P 500 index soaring by a more modest 15%. That is far from a healthy return on investment, and investors should be wary of companies with high debt levels and low ROI.
It’s important to note that several of these businesses have worked to lower their debt over time, such as BHP and Rio, whose overall leverage dropped from around 40% at the end of 2009 to about 24% at the end of 2016.
Bottom line:
The mining and energy industries have been binge buying in the past few years, with combined cash holdings increasing by around $80 billion between 2012 and 2016. This trend continued into 2017, as companies such as BHP Billiton and Rio Tinto repurchased massive shares to drive stock prices up. This was about open upload south32 suing bhp.com 100 billion dollars class action lawsuit flikr