Elliott Says Phillips 66 Should Sell or Spin Off Pipeline Unit

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Elliott Says Phillips 66 Should Sell or Spin Off Pipeline Unit

Elliott Investment Management disclosed a more than $2.5 billion stake in oil refiner Phillips 66 and plans to push the company to sell or spin off its pipeline business. The activist investor, which began pressing for changes at Phillips 66 in 2023, said in a letter to the refiner Tuesday that it’s now one of […]

Elliott Investment Management disclosed a more than $2.5 billion stake in oil refiner Phillips 66 and plans to push the company to sell or spin off its pipeline business.

The activist investor, which began pressing for changes at Phillips 66 in 2023, said in a letter to the refiner Tuesday that it’s now one of its top five investors and believes the company hasn’t followed through on promises to improve operations.

“This experience has been frustrating but has clarified the scale of the problem and reinforced the urgent need for the company to pursue an alternative path,” Elliott said in its letter.

Phillips 66 shares surged 4.9% before the start of regular trading in New York.

Elliott, which has successfully pushed for changes at some of the world’s largest companies, said Phillips 66 should streamline its operations. Selling its pipeline business could “command a premium valuation in excess of $40 billion,” the activist said.

Elliott also said Phillips 66 should set more ambitious refining targets and add new independent directors to its board to bolster accountability and improve oversight.

A spokesman for Phillips 66 said the company “is on the right path” and that its 2024 results reflect strong operating performance.

“As we continue to execute our strategy, we continue to welcome constructive dialogue with Elliott and all of our shareholders,” the spokesman, Al Ortiz, said in an email.

The fund, controlled by billionaire Paul Singer, first disclosed a stake in Phillips 66 in 2023, revealing an investment of about $1 billion and saying the company could increase its stock price 75% by focusing more on refining and taking other measures.

Since then, the company appeared to be working with the activist firm. One year ago, the investor and Phillips 66 announced the refiner would name Robert Pease, a former president of Shell Trading Co., to its board to provide more refining experience.

Phillips 66 has also been in the midst of a multi-year cost-cutting initiative targeting $3 billion in asset sales as a result of pressure from Elliott. In October, Phillips 66 said it had sold about $2.7 billion in assets since 2022.

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