US hedge fund swoops on SSE: Energy giant may be set for £20bn takeover as corporate raider Elliott Management builds up stake
- The world’s most powerful activist investor has secretly built a stake in energy giant SSE in a move that could lead to a £20billion takeover bid
- City sources said Elliott Management has recently bought a large shareholding in SSE
- It’s not clear how large Elliott’s shareholding in SSE is and why it has taken the position in the London-listed group
- Some City sources said that if the company’s management team fails to engage with the activist hedge fund it may launch a confrontational campaign
The world’s most powerful activist investor has secretly built a stake in energy giant SSE in a move that could lead to a £20billion takeover bid for the FTSE100-listed company.
City sources said Elliott Management, which has been dubbed a ‘corporate raider’ for buying shares and forcing change at large companies, has recently bought a large shareholding in SSE which supplies around five million Britons with energy to their homes.
It’s not clear how large Elliott’s shareholding in SSE is and why it has taken the position in the London-listed group.
Under the microscope: It’s not clear how large Elliott’s shareholding in SSE is and why it has taken the position in the London-listed group
However, some City sources said that if the company’s management team fails to engage with the activist hedge fund it may launch a confrontational campaign to force a shake up at the blue-chip power and broadband provider.
Elliott Management, founded by Wall Street hedge fund manager Paul Singer, specialises in buying shareholdings in big listed corporations and then agitating for change to boost the company’s share price.
If Elliott, which is also known as Elliott Advisers, does reveal its position in SSE this would be the second time in 2021 it has targeted a FTSE100 giant.
Earlier this year it emerged Elliott had become a shareholder in GlaxoSmithKline and has made a series of controversial demands to the pharmaceutical giant’s board.
Those demands include appointing new directors and attempting to force through a process that would determine whether Dame Emma Walmsley should hold on to her job as chief executive of the company when it spins off its consumer division.
Effectively, Dame Emma would have to reapply for her own job.
Elliott also called for GlaxoSmithKline to run a sale process of its consumer health division – which includes brands such as Sensodyne toothpaste and Panadol paracetamol – ahead of a demerger of the unit into a separately listed company next year.
Some City sources speculated Elliott’s move on SSE may eventually lead to a multi-billion bid for all or some of the energy group.
Many of Elliott’s previous activist investments and campaigns have led to significant corporate activity. For example, three years ago Elliott bought a huge shareholding in Whitbread, the operator of Premier Inn, and pushed for the company to sell its Costa Coffee chain.
Four months later Coca-Cola agreed to buy Costa Coffee from Whitbread for £3.9billion.
And last year AstraZeneca paid $39billion for American drugs group Alexion Pharmaceuticals after Elliott repeatedly pushed for the US-listed company to sell itself to a potential buyer.
If Elliott’s move on SSE does trigger corporate activity City sources speculated the FTSE100- listed firm could be of interest to a European power giant, such as France’s EDF or Spain’s Iberdrola, which paid £11.6 billion for Scottish Power in 2007.
Elliott was founded by Paul Singer, a Republican donor, in 1977 with $1.3million from friends and family. His personal wealth is estimated to be around $4.3billion.
Since then, Singer has grown the business into the world’s largest hedge fund group with over $30billion under management.
As well as investing in blue chip businesses and taking on established management teams Elliott runs a wide range of equity and debt investment strategies that have led to an investment in AC Milan, the Italian Serie A football club.
Elliot’s other strategies include buying up sovereign bonds of struggling countries, such as Peru and Argentina, on the cheap and pursuing full payment through the courts. This has drawn criticism from commentators for its aggressive approach in pushing for change.
SSE and Elliott both declined to comment.