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Activist hedge fund Elliott said its long-term thesis on British mining conglomerate Anglo American was “very interesting and very much intact”, after the fund built a stake of $1bn during a takeover offer by Anglo rival BHP.
In Elliott’s first comments on the deal since it disclosed its stake in April, equity partner Nabeel Bhanji said the US hedge fund was in a “very good [and] constructive]” dialogue with Anglo’s management.
“The BHP approach was third-party validation that clearly this is an asset that has a very interesting portfolio that is just trading at the wrong price,” said Bhanji at the Financial Times Due Diligence conference on Tuesday. “We’ve got billions of dollars riding on that bet.”
Bhanji added that BHP’s approach in April, which sent the London-listed miner’s share price up 13 per cent, was “genuinely annoying” as the firm was only “part way through our stake build”. Official filings in May showed that Elliott held 3.5 per cent of the FTSE 100 miner.
After intense negotiations and several improved offers by BHP, the talks collapsed at the end of May.
Elliott manages about $70bn for investors and invests in a mix of private and public companies. It has a reputation for taking on company management if it strongly disagrees with a company’s strategic direction.
Anglo is under pressure to make good on its radical plan to reshape the business following BHP’s failed takeover of the group — a restructuring that includes selling off parts of the business to leave it with a core three divisions of copper, iron ore and fertiliser.
Chief executive Duncan Wanblad said in September that plans to offload businesses including its DeBeers diamond arm would mean “we will get a re-rating” and Anglo would become “a very high-quality business”. Shares in Anglo have jumped 12 per cent in the past month, supported by the recent Chinese stimulus measures that have bolstered mining stocks.
Wanblad also said that he expected to finalise the sale of Anglo’s coal business this year, though a disposal of the diamonds business could extend beyond the planned restructuring timeline.
Investors have been speculating about whether BHP would return to bid again for Anglo, which it could do from the end of November under London takeover rules. Analysts at BNP Paribas said this month that it was “unlikely” for BHP to bid again for Anglo until the company was “more progressed through its restructuring process.”
Anglo said it was making progress in delivering its accelerated plan set out in May.
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