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  "documentTitle": "Phillips 66 (PSX)",
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  "notes": "Uses a scatter plot to show the correlation between SpinCo equity value and separation costs as a percentage of equity value.",
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      "text": "03 Company Claim: Tax Leakage in a Sale ~$10bn",
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      "text": "04 Company Claim: One-Time Breakage Costs >$500mm",
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      "text": "ANOTHER EXAMPLE OF UNAMBITIOUS AND UNINFORMED LEADERSHIP",
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      "text": "One-Time Separation Costs as % of SpinCo Equity Value",
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      "text": "Elliott engaged with a top accounting firm and well-known corporate tax research analyst Robert Willens to perform an outside-in tax analysis. Several recent actions by Phillips 66 would have stepped up its tax basis. Experts conclude that it is unlikely Phillips 66 shareholders would face ~$10 billion of tax leakage.",
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      "text": "Phillips 66 ignores the impact of scale in one-time cost analysis. Energy-specific SpinCo data indicates separation costs as a % of SpinCo equity value should be ~0.6%. This implies ~$200 million of breakage vs. Management’s $500 million.",
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      "text": "One-Time Separation Costs as % of SpinCo Equity Value: $500mm",
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      "text": "Phillips 66 has guided the market to artificially high one-time costs for a Midstream separation transaction. A sophisticated Board with relevant experience and a focus on maximizing shareholder value could take actions to reduce these costs.",
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      "text": "Interestingly, according to our analysis, there is no correlation between one-time costs and outperformance.",
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      "text": "Using an ‘all-in’ tax rate of 23%, we arrive at a tax liability of approximately $5.75 billion, an amount markedly below the $10 billion in tax leakage that PSX has guided to.",
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      "text": "Using an ‘all-in’ tax rate of 23%, we arrive at a tax liability of approximately $5.75 billion, an amount markedly below the $10 billion in tax leakage that PSX has guided to. PSX, in the aforementioned presentation, noted that its adjusted bases in its Midstream assets approximated $4.4 billion. This is inconsistent, to a considerable degree, with the work we and other professionals have performed. — Robert Willens C.P.A.",
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      "text": "See pages 107 of Elliott's 4/28/25 “Perspectives on Value Creation” presentation for further detail",
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      "text": "ONE-TIME COSTS ARE ALSO OVERSTATED",
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