Elliott takes $1 billion stake in US oil refiner Phillips 66, urges board revamp

investing.com:

By Svea Herbst-Bayliss and Laura Sanicola

(Reuters) -Elliott Investment Management has taken a $1 billion stake in Phillips 66 (NYSE:PSX) and is urging the U.S. oil refiner and pipeline operator to revamp its board to boost lagging performance.

The activist investment firm in a letter to the Houston energy company's board on Wednesday said Phillips 66's stock, recently trading at around $118 per share, could hit $200 with improvements. It said management had laid out sensible performance targets but could use help achieving its full potential.

Phillips 66 has lagged its U.S. refining rivals at a time when fuel demand and margins have soared for the industry. Its second-quarter earnings missed Wall Street estimates, but executives have laid out a plan to boost returns by cutting costs and assets. It may sell or spin off $3 billion in assets next year, executives said.

Phillips 66 Chief Executive Mark Lashier acknowledged discussions with Elliott but did not say whether the company was open to adding two Elliott-recommended directors to its board.

Phillips 66 welcomes «their perspectives and the perspectives of other shareholders on our strategy and actions we are taking to drive long-term sustainable growth and value creation,» Lashier said in a statement. «We remain committed to acting in the best interests of our shareholders.»

Shares of the refiner, which has a market value of $52 billion, were up 3.3% to $121 per share.

Prior to the letter's release, Phillips 66 stock was up 8.3% from a year ago, compared to a 21.5% gain at larger rival Marathon Petroleum (NYSE:MPC) during the same period.

INVESTORS 'LOST CONFIDENCE'

«Given the company's history of failed execution, we believe shareholders would welcome the