SSE shareholders reject Elliott break up bid

SSE, the Perth-based renewable power and networks giant, has received support from institutional shareholders Royal London Asset Management and Columbia Threadneedle in its rejection of a bid by US activist hedge fund Elliott Management to break the Scottish company into two firms by spinning off its renewables business.

The shareholder support came as SSE issued another stock exchange statement against Elliott’s proposal, in which chair John Manzoni said SSE’s board “maintains the highest corporate governance standards” and CEO Alistair Phillips-Davies said separation of the renewables business would put at risk valuable growth options and “jeopardise our ability to finance and deliver the major infrastructure the UK needs …”

SSE is one of Scotland’s largest listed companies and among the country’s biggest employers.

Mike Fox, head of sustainable investments at top 10 SSE shareholder Royal London Asset Management, said his firm believes “SSE’s blend of networks, renewables and thermal generation is the right business approach, from both a climate perspective and an investment perspective.”

Fox told London’s Financial Times newspaper the dispute with Elliott over SSE’s direction is a “shareholder versus stakeholder debate.”

Fox said: “SSE is critical to UK infrastructure and if Britain is to deliver on its net zero targets then SSE will have to deliver on its business plan.”

He said Elliott’s campaign is “very share price focused and that’s just one element to the situation.”

Fox said: “The disruption that would result from splitting the business would slow down and impact the delivery of a significant offshore wind pipeline …

“It would mean that SSE spent the next 12 months restructuring rather than delivering.”

Elliott has claimed SSE’s recent strategic review was “opaque” and it “raised serious questions about the legitimacy of the review and the adequacy of SSE’s corporate governance under which it was conducted.”

The hedge fund says “funds advised by Elliott Advisors (UK) Limited … together represent one of the top five investors in SSE.”

Another SSE shareholder, Columbia Threadneedle, said it also opposed Elliott’s push to break up the company.

“We are not convinced that breaking up SSE into two separate companies makes sense as there is a strategic logic in keeping the group together,” said Jonathan Barber, UK equities portfolio manager at Columbia Threadneedle.

“Whilst the valuation of the two individual parts of the business is quite transparent, this is yet to be properly recognised by the market, but as a long-term shareholder we believe that over time this will change.”

Fox of Royal London Asset Management added: “There’s an element of Elliott’s letter suggesting that the company has not been engaging with shareholders — that’s not the case from our perspective.”

Fox said he “didn’t recognise Elliott’s criticism about the opacity of the review process.”

On Elliott’s call to appoint two new independent directors with renewables experience, Fox said: “SSE has the largest portfolio of renewable assets in the UK and today it is building more offshore wind farms than any company in the world. It doesn’t seem to lack experience in terms of renewables.”

On Wednesday, SSE came under a fresh attack from Elliott Management, which is now calling for the Perth energy giant to “explore additional strategic initiatives, including a more ambitious disposal of Networks and a partial listing or partial disposal of Renewables.”

Elliott, which criticized the performance of SSE CEO Phillips-Davies, also called on the Perth group to hire two new independent directors with renewables experience and to create “a strategic review committee composed of independent board members.”

Elliott has also argued that SSE should “list the entirety of its Renewables business, creating two standalone FTSE 100 UK companies.”