02:43 PM EST, 02/11/2025 (MT Newswires) -- Phillips 66 (PSX) investor Elliott Investment Management urged the oil refiner on Tuesday to spin off or sell its midstream business, which it said could command a valuation of more than $40 billion.

In a letter to the Phillips 66 board, Elliott said it is one of the top five investors with more than $2.5 billion in investments. It outlined a number of steps Elliott's management could take to turn the business around through the dismantling of its conglomerate structure.

Separating out Phillips' "world-class midstream business" would remove it from a corporate structure that has diminished and obscured its value, Elliott wrote. Phillips 66 did not respond to a request for comment from MT Newswires. Its shares rose 4.4% in afternoon trade.

Elliott additionally urged the Phillips 66 board to sell its interest in CPChem and execute on the "frequently discussed sale" of its JET retail business in Germany and Austria.

"Divesting non-core assets, such as CPChem and select European retail operations, would allow Phillips to increase capital returns to its shareholders and sharpen its focus on operational excellence within its core business," Elliott Partner John Pike and Senior Portfolio Manager Mike Tomkins wrote in the letter.

Elliott requested Phillips 66 conduct an operating review focused on improving refining profitability and that it add new independent directors to bolster accountability.

Elliott first went public with its views on Phillips 66 in late 2023. The company "has failed to make meaningful progress on its targets," calling for urgent changes, according to the letter.

Late last month, Phillips 66 reported that it swung to a fourth-quarter loss of $0.15 per share from earnings of $3.09 in the same period a year earlier.

Price: 129.13, Change: +5.42, Percent Change: +4.38