Odey hits out at Anglo American’s rescue bid for Sirius Minerals
Hedge fund says £524m offer undervalues North York potash mine developer
Hedge fund Odey Asset Management has lashed out at Anglo American’s £524m rescue bid for Sirius Minerals, saying it does not represent fair value for the company’s shareholders.
In an open letter to Chris Fraser, the chief executive of Sirius, and Anglo boss Mark Cutifani, Odey also said it would vote against any offer that is not designated “final”.
“Odey believes Anglo American have chosen not to declare their offer as ‘final’ because there is a risk of both the deal failing at its current level, and of an interloper at a later stage,” said the letter, which was signed by Odey’s fund manager Henry Steel.
“Odey therefore commits to vote against any Anglo American offer that is not designated as ‘final’ at this level. If Anglo wish to retain the option to counter bid, Odey accepts that rationality, and hence also commits today to vote in favour of any bid at 7p or above,” the letter said.
Anglo has offered 5.5p a share for Sirius, which has been struggling to finance the development of a huge potash mine on the North York Moors. The emergence of Odey as shareholder threatens to derail the bid, although it is likely to be seen by Sirius and Anglo as an attempt to extract a higher price. Odey has a 1.29 per cent interest in Sirius, according to regulatory filing released on Wednesday.
Thousands of retail shareholders face huge losses if the deal goes ahead. However, Sirius sees the Anglo bid is the best way of realising some value for investors as well as safeguarding the development — the largest mining project in the UK for a generation.
It has also warned investors that if the takeover is not approved, the company — which is running out of cash — is likely placed into administration.
However, Mr Steel reckons there is “material upside” for an entity that can fund the development costs of the Woodsmith mine.
“It is Odey’s belief that Anglo-American’s current offer does not represent fair value for shareholders in Sirius,” Mr Steel said.
Sirius shareholders will vote on whether to accept the deal on March 3. Of those present at the meeting, 75 per cent will need to vote in favour for the bid in order for it to be completed.