- Elliott Investment Management has taken a $2.5 billion stake in oil refiner Phillips 66 (PSX), pushing for the sale or spin-off of its midstream business to simplify operations.
- The activist investor’s involvement has led to Phillips 66 shares rising over 7% in premarket trading, reflecting market approval of Elliott’s strategic suggestions.
- Phillips 66 has already responded to Elliott’s pressure by appointing refining expert Robert Pease to its board and pursuing a $3 billion asset sale program, with $2.7 billion completed since 2022.
Phillips 66 (PSX) experienced a significant boost in its stock value, with shares rising more than 7% to $132.54 in premarket trading on Tuesday, following news that Elliott Investment Management has amassed a stake worth over $2.5 billion in the company. This development, as first reported by the WSJ, underscores Elliott’s aggressive approach, pushing for substantial changes at Phillips 66, including the potential divestiture of its midstream business. The activist investor, known for its influence in corporate governance, believes that Phillips 66 has not adequately followed through on commitments to enhance its board and refocus its business strategy.
Elliott, led by billionaire Paul Singer, has a track record of engaging with companies to unlock shareholder value, often through strategic overhauls. Initially, Elliott disclosed a $1 billion stake in Phillips 66 in 2023, advocating for a 75% increase in stock price by concentrating on refining and other operational efficiencies. Over the past year, their involvement has led to notable actions at Phillips 66, including the appointment of Robert Pease, a refining expert from Shell Trading Co., to the board, signaling a push towards refining-centric leadership.
Moreover, Phillips 66 has been under pressure to streamline its operations, evidenced by its ongoing $3 billion asset divestiture program, with about $2.7 billion in sales already achieved since 2022. This initiative reflects the broader industry trend towards simplification and focus on core competencies, often catalyzed by activist investors like Elliott.
Elliott’s current stake, representing approximately 0.2% of Phillips 66’s shares, though small in percentage, carries significant weight due to Elliott’s reputation and the strategic insights it brings to the table. As mentioned, the WSJ first reported on this increased stake, which has evidently resonated with the market, as seen in the immediate rise in stock price. This scenario illustrates the impact activist investors can have on corporate strategy, market perceptions, and ultimately, shareholder value.
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