Elliott Funding Administration disclosed a greater than $2.5 billion stake in oil refiner Phillips 66 and plans to push the corporate to promote or spin off its pipeline enterprise.
The activist investor, which started urgent for modifications at Phillips 66 in 2023, mentioned in a letter to the refiner Tuesday that it’s now one in all its prime 5 traders and believes the corporate hasn’t adopted via on guarantees to enhance operations.
“This expertise has been irritating however has clarified the dimensions of the issue and strengthened the pressing want for the corporate to pursue an alternate path,” Elliott mentioned in its letter.
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Phillips 66 shares surged 4.9% earlier than the beginning of standard buying and selling in New York.
Elliott, which has efficiently pushed for modifications at a few of the world’s largest firms, mentioned Phillips 66 ought to streamline its operations. Promoting its pipeline enterprise may “command a premium valuation in extra of $40 billion,” the activist mentioned.
Elliott additionally mentioned Phillips 66 ought to set extra formidable refining targets and add new unbiased administrators to its board to bolster accountability and enhance oversight.
A spokesman for Phillips 66 mentioned the corporate “is on the precise path” and that its 2024 outcomes replicate sturdy working efficiency.
“As we proceed to execute our technique, we proceed to welcome constructive dialogue with Elliott and all of our shareholders,” the spokesman, Al Ortiz, mentioned in an e-mail.
The fund, managed by billionaire Paul Singer, first disclosed a stake in Phillips 66 in 2023, revealing an funding of about $1 billion and saying the corporate may enhance its inventory value 75% by focusing extra on refining and taking different measures.
Since then, the corporate gave the impression to be working with the activist agency. One yr in the past, the investor and Phillips 66 introduced the refiner would title Robert Pease, a former president of Shell Buying and selling Co., to its board to offer extra refining expertise.
Phillips 66 has additionally been within the midst of a multi-year cost-cutting initiative focusing on $3 billion in asset gross sales because of strain from Elliott. In October, Phillips 66 mentioned it had offered about $2.7 billion in belongings since 2022.
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