Elliott Renews Pressure on SSE Leadership Over Strategy -- Update
By Jaime Llinares Taboada
Elliott Advisors (UK) Ltd., one of the largest shareholders in
SSE PLC, on Tuesday called for the board to restore investor
confidence and continued its push for the energy company to spin
off its renewables division.
The Elliott Management Corp. subsidiary, which has been pushing
for the separation of SSE's renewables business from the rest of
the company, said in a letter to Chairman John Manzoni that it was
challenging the energy company to provide a plan to address
investor concerns around its corporate governance, its ability to
fund growth in the long term, and its "persistent
SSE is one of the U.K.'s largest energy transmission and
distribution companies. However, the group is now focused on
growing its portfolio of wind farms.
Elliott said the letter "was sent in the wake of the company's
disappointing announcement on Nov. 17 and the resulting decline in
SSE's stock price". That day shares in SSE closed 4.3% lower after
the group said it would cut the dividend and sell stakes in its
network business to fund investment in renewables.
Elliott said the announcement failed to provide any explanation
for why SSE wasn't pursuing a listing of the renewables assets,
which the investor estimates could have unlocked 5 billion pounds
($6.63 billion) of value. In addition, Elliott said the plan to
sell a minority interest in the networks division lacked ambition,
and that cutting the dividend disappointed many income-oriented
In the letter, the shareholder called on SSE to explore
additional strategic initiatives, including a more ambitious
disposal of the networks business and a partial listing or partial
disposal of the renewables division. It also proposed the
appointment of two new independent directors with renewables
experience, and to create a strategic review committee composed of
independent board members.
A representative for SSE wasn't available for comment.
Shares in SSE at 0859 GMT were down 0.3% at 1,626 pence.
Some analysts have been critical of SSE's strategy in recent
months. RBC Capital Markets said the company is in danger of
disappointing both income investors looking for cashflow generation
from networks, and growth investors attracted to the renewables
portfolio. Similarly, as quoted by Elliott in its letter, Barclays
analysts have said that they see SSE trying to please everyone at a
risk of pleasing no one.
RBC said in a note Tuesday that any change of direction from SSE
management could be some distance away.
Write to Jaime Llinares Taboada at email@example.com;
(END) Dow Jones Newswires
December 07, 2021 04:16 ET (09:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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