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Investing.com -- Activist hedge fund Elliott Investment Management wants Phillips 66 (NYSE:PSX) to sell or spin-off its midstream business. However, recent comments from CEO Mark Lashier suggest he is not a fan of this approach.
In transcripts released Tuesday evening of a fireside chat last week, Lashier told attendees of a Daniels Energy Partners event that the midstream and refinery businesses “complement” each other, thus pushing back on any suggestion that they should split off the business.
“… look we have a great opportunity to grow a great midstream franchise. So, let’s get on with that, let’s do that. Let’s execute that,” Lashier said. He added, “Also, recognition that we have an opportunity to have a world class refining business as well. But we’ve had some work to do, and we’ve been on a bit. We’re two and a half years into a journey of improvement to create that world class refining platform that we believe, complements what we have in our NGL midstream business.”
Elliott, which has a $2.5 billion position in Phillips 66 and recently nominated seven candidates to the board, views a spinoff or sale of the midstream business as a key tenet of their thesis. They believe the unit could be worth more than $40 billion, compared to the company’s total market value of around $50 billion.
In addition to the sale or spin-off of the midstream business, Elliott believes the company should sell its interest in CPChem and execute the sale of its JET retail operations in Germany and Austria.
In a recent letter to shareholders, Phillips 66 highlighted that it has had nearly two dozen meetings with Elliott since October of 2023 and, in 2024, added Bob Pease to the board in partnership with Elliott. They said that although they made multiple efforts to agree on adding another director, Elliott has opted to bypass constructive dialogue and instead pursue their activist strategy.
Further, the company highlighted that they have delivered total shareholder returns of 65% since Lashier became CEO on July 1, 2022, and have returned $13.6 billion in share repurchases and dividends from July 2022 through year-end 2024.
Elliott did not comment on Lashier’s recent statement about the midstream business. Phillips 66 has not responded to a request to comment.