Deal is Anderson's ultimate triumph

BHP Chief Executive Paul Anderson

In this story: The Big Australian Changing corporate culture Shareholder value the bottom line RELATED SITES

By Grant Holloway
CNN.com Senior Editor

SYDNEY, Australia (CNN) -- A successful merger with Billiton will be the ultimate triumph for BHP's American chief executive Paul Anderson.

When Anderson assumed control of BHP in late 1998, the company was in a slump after a number of multi-billion dollar investments had gone sour. The share price was plunging as investors baled out and management morale plummeted.

Anderson, who came from Duke Energy in the United States, was quick to articulate a strategy for the company. He then surprised many in the sometimes staid Melbourne business community with his drive and purpose in achieving this strategy.

In a little over two years Anderson has done what few thought possible. He has turned a sprawling, wounded giant of a company into a tightly focussed resources house which is now poised to become a genuinely global player.

This has always been Anderson's stated goal for the company -- one which he seems destined to accomplish by the time he meets his self-imposed retirement date of December 31, 2002.

The Big Australian

BHP, colloquially known as The Big Australian, had dominated the Australian corporate landscape for decades. It was Australia's largest company right up until the mid 1990s and, along with News Corporation, one of the few with a sizeable international profile.

But a series of appalling investment decisions during the 1990s had seen the company lose its way. When the BHP board effectively sacked chief executive John Presscott in 1998, it effectively acknowledged that fresh blood was needed to reinvigorate the company.

After a tortuous executive search process which took many months, the board finally opted for Texan Anderson.

Changing corporate culture

Anderson set about changing the corporate culture of BHP.

Long renowned for its bureaucratic and formal decision making processes, Anderson flattened the management structure. He encouraged input from the hands-on division operators on how the company could be run better.

Gregarious by nature, he often eschews the executive dining room and can be found eating in the staff canteen.

But for all the bonhomie, Anderson clearly considers himself in charge. And he has made the tough decisions to prove it.

He has written off billions of dollars of misplaced investment in the Magma copper operations in the United States and an ill-fated hot-briquetted iron manufacturing operation in Western Australia.

Perhaps his most contentious move was to last year close the giant BHP steel making operations in Newcastle, New South Wales.

Shareholder value the bottom line

Long a symbol of BHP's industrial might and its iconic position in Australia, Anderson bit the bullet and closed the poorly-performing plant, laying off thousands of workers in the process.

As Anderson explained in an interview last year, the bottom line is to create shareholder value.

"My whole thrust in looking at the company and then developing the strategy going forward, is how can we maximize shareholder value, and that's really the only consideration," he said.

"I don't think there's any emotional tie to business lines or any need to be in this business or need to be in that business. The real question is if I've got a business unit here, is it more valuable to the shareholders being owned a hundred per cent by them or being owned a hundred per cent by someone else, or being joint ventured with somebody or being partially owned by the public?

"If there's a better way to hold that asset, be it partially, wholly or not at all, then we'll take that action."

This latest move, is the Anderson lore writ large. For the shareholders who have backed his judgement, they are now being richly rewarded.

On the day the Billiton announcement was made, the share price of BHP leapt as much as 65c Australian cents to $21.60, a far cry from the $10 prices the shares reached before Anderson's ascendancy.

BHP
Billiton

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