Here’s why BHP Billiton Limited has decided to list NewCo in London

BHP Billiton Limited (ASX: BHP) has given in to shareholder pressure and announced its new spinoff company will have a standard listing on the London Stock Exchange, in addition to the proposed listing on the ASX and Johannesburg Stock Exchange.

BHP confirmed its plans to demerge roughly $15 billion worth of non-core assets when it reported its full-year results in August. The news was not well received after the miner snubbed investors in the UK by proposing the new entity – currently known as ‘NewCo’ – would only be listed in Australia and South Africa.

This would have made it almost impossible for fund managers with European-only mandates to hold their stake. In fact, The Australian Financial Review reported that 42% of London shareholders would have been forced into selling, which would have given NewCo a very turbulent introduction to the global market.

According to BHP Billiton’s CEO, Andrew Mackenzie, the company hopes the demerger will be complete in the first half of the 2015 calendar year, while it should also help unlock significant shareholder value from both entities.

Although the iron ore price fell overnight, BHP’s shares have risen 0.3% following the update.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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