What could delisting from the LSE mean for BHP shares?

What’s happening with BHP’s dual listing?

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The BHP Group Ltd (ASX: BHP) share price closed on the back foot on Thursday. Shares in the mining giant tumbled more than 5% for the second day in a row following its announcement of significant business reshaping.

At market close, the BHP share price is 6.14% lower to $44.77 apiece. That means shareholders are now down roughly 18% from the 52-week high that was set earlier this month.

Some shareholders have shared great disappointment with the dual-listed company’s plan to do away with its spot on the London Stock Exchange.

What it means for the BHP share price?

Coming back home

In its preliminary report, BHP shared its intentions to simplify its corporate structure by doing away with its current dual listing.

Currently, BHP shares hold a main listing on both the Australian Stock Exchange and the London Stock Exchange (LSE). This eventuated after BHP merged with South African mining company, Billiton, back in 2001.

As a result, BHP Group has come to be an integral part of the FTSE 100 Index in London over the years gone by. Delisting from the LSE would automatically trigger the iron ore miner’s removal from the index.

The announcement has left some UK investors shocked and saddened to be potentially losing what has become a staple of many portfolios. However, CEO Mike Henry reassured investors abroad that there will remain a secondary listing on the LSE, clarifying BHP will only be unifying its main listings.

In the report, BHP highlighted the unification of BHP shares is particularly attractive from a cost perspective. The company expects the simplification to reduce duplication as well as streamline governance and internal processes.

Additionally, management believes now is an ideal time for the unification process. The reason being is the expected costs of moving to one main listing are now between US$400 million to US$500 million. Previously, the estimated costs came to around US$1.2 billion.

Where to next?

The unification proposal still requires approval. However, if it proceeds, BHP will likely delist from the London Stock Exchange in the first half of the 2022 calendar year.

At the same time, the BHP share price will be in focus as its attempts to merge its petroleum business with Woodside Petroleum Ltd (ASX: WPL).

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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