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Activist investor Palliser Capital is seeking to force Rio Tinto to conduct an “independent, comprehensive and transparent” review into abandoning its primary London listing by submitting a resolution on the issue for the company’s next annual meeting.
Palliser has been campaigning since May for the miner — one of the biggest constituents of FTSE 100 index — to follow rival BHP by unifying its corporate structure in Australia.
Palliser has argued that the group’s current dual-listed structure, and its primary London listing, have deprived shareholders of $50bn in value. It is calling for Rio Tinto to become a single Australian-domiciled holding company with a primary listing on Australia’s stock exchange.
A departure by Rio Tinto, which has a market capitalisation in London of about £60bn, would be a further blow to a London market that has been suffering a dearth of listings and a wave of departures through takeovers or company moves to other trading venues.
London-based Palliser, which holds around $250mn of both Rio Tinto’s London and ASX-listed shares, has submitted a resolution along with 100 other shareholders demanding the review, meaning it has enough support to be on the agenda for the meeting in April.
However, under the dual listing, 77 per cent of the company is held through London-listed Rio Tinto, and only 23 per cent through its Australian-listed entity, making it less likely that the activists will succeed.
The activists met chief executive Jakob Stausholm on December 4.
In a letter to board members published on Thursday, Palliser said it had set out an “irrefutable” case to abandon the dual-listed company (DLC) structure and that management’s support for the status quo was “flawed and unconvincing”.
“Despite us demonstrating the overwhelming empirical evidence in favour of unification, management has remained adamant that there is no value case for this step whatsoever,” Palliser wrote.
The letter said the resolution was “simple”.
“It directs the Board to conduct an independent, comprehensive and transparent review on whether unification of Rio Tinto’s DLC structure is in the best interests of Rio Tinto’s shareholders and to share the detailed findings of that review with the market,” the letter said.
Palliser has argued that all shareholders would benefit from a move to a single ASX listing because the Australian shares enjoy a higher valuation than the London-listed equity. It has also said that a single listing would allow the company to conduct acquisitions by paying in shares instead of cash, as it has done for every deal since it adopted the dual-listing structure.
Rio Tinto has repeatedly said that unifying its listing would cost “mid-single digit billions of dollars” in tax. The company has also said that it had conducted an internal review and concluded that such a move would destroy value.
Rio Tinto declined to comment on Palliser’s letter.
The miner’s London-listed shares were down 1 per cent in early trading, at £47.10.
