Headline: Elliott Invests $2.5 Billion in Phillips 66, Calls for Sale of Midstream Business
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Elliott Investment Management has acquired a stake worth over $2.5 billion in Phillips 66, advocating for operational changes and the divestiture of the company's midstream business. Following Elliott's initial investment of $1 billion in March, Phillips 66 implemented a performance improvement plan. However, according to Elliott, this plan has not met expectations, necessitating urgent action.
Elliott maintains that Phillips 66's shares have underperformed compared to peers. The investor proposes a comprehensive restructuring, including the sale or spin-off of the midstream business, divestment of CPChem interests, and disposal of JET retail operations in Europe. Elliott estimates a potential valuation of over $60 billion for the midstream business if it were to be sold or separated.
Additionally, Elliott calls for the appointment of independent directors to enhance accountability and a management review. The hedge fund emphasizes the need for ambitious refining targets and prioritizing profitability in light of declining refining margins across the U.S. industry.