Monday, November 15, 2010

BHP Billiton (NYSE:BHP) Starts Buying Back Shares

Under pressure from shareholders, and with little to show over the last several years from failed attempts to acquire Rio Tinto (NYSE:RIO), and trying to merge iron ore operations with them, along with not being able to successfully acquire Potash Corp. (NYSE:POT), BHP Billiton Ltd. (NYSE:BHP) has decided to buy back shares, evidently considering that the best use of extra capital at this time.

BHP and CEO Marius Kloppers probably wouldn't want to undertake another acquisition attempt any time soon, as a failure could end Kloppers' tenure at the company and show weakness as to his ability to get a deal done.

This is really a resumption of a buyback program which has been suspended in 2007, where they were going to back $13 billion of their own shares. Now they're going to acquire another $4.2 billion in shares, BHP said in a statement today.

Some had thought BHP was going to buy back a larger amount of shares, generating the question as to whether or not they have any contingency plans in place.

Shareholders have also pressured BHP to make acquisitions for the purpose of growth, buy it seems they've decided to accept buying back of shares rather than the pursuit of other companies at this time.

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