Latest news with #ElliottManagement
Reuters
3 days ago
- Business
- Reuters
Italy's Banca CF+ launches takeover bid for Banca Sistema
ROME, June 30 (Reuters) - Banca CF+, an Italian bank controlled by U.S. investment fund Elliott Management Corp, said on Monday it was launching a takeover bid for Banca Sistema ( opens new tab. The public exchange offer is the latest in a number of M&A deals to shake the Italian banking sector in recent months. Banca CF+ is offering 1.8 euros per share of Banca Sistema, including 1.382 euros in cash and 0.418 euros in shares of Kruso Kapital ( opens new tab, a unit of Banca Sistema, Banca CF+ said in a statement. Banca Sistema did not immediately respond to an emailed request for comment from Reuters. Banca Sistema's shares on the Milan bourse closed at 1.964 euros on Friday, giving the bank a market capitalisation of around 158 million euros ($185.43 million). "The Italian banking sector is going through a phase of consolidation. Even in the segment of specialized banks, there is a need for larger and more efficient operators," Banca CF+ CEO Iacopo De Francisco said in the statement. "The integration of Banca CF+ with Banca Sistema allows us to combine skills, technologies and industrial vision to create a more solid and innovative operator, capable of growing in the chosen business segments," he said. ($1 = 0.8521 euros)
The Guardian
3 days ago
- Business
- The Guardian
What would happen if Thames Water is temporarily renationalised?
When the environment secretary, Steve Reed, stood up in parliament last week, his message for the owners of the struggling Thames Water appeared clear: there would be no leniency on fines for breaching environmental standards – despite the requests of creditors who control the company. Amid the standoff, Reed said the government had 'stepped up our preparations' for the next stage: putting the company, a provider of water and sewage services to 16 million customers in London and south-east England, into temporary nationlisation, known as a special administration regime (SAR). Thames Water's perilous position stems from years of mismanagement, during which it built up unsustainable debts of about £20bn. Over the past year its problems have come to a head, with the company scrambling through a court battle in February to secure emergency funding, and now finding new owners. Things have not gone smoothly. The US investor KKR pulled out of its bid to buy Thames, leaving a group of about 100 creditors in line to take over the ownership. They include big institutional investors such as Aberdeen, BlackRock, Invesco and M&G, as well as US hedge funds such as Elliott Management and Silver Point Capital. So what would temporary nationalisation actually involve? Rather than selling off the business for parts, the special administrator's first priority is maintaining the essential water service. Similar regimes are in place for other crucial institutions such as energy companies, the Post Office and banks. The creditors would have a claim on proceeds of an eventual sale after that objective has been achieved. Senior class A bondholders would expect to receive some money back. The loans of class B creditors are likely to be worthless, and Thames's official owners last year acknowledged that their shares were worth nothing. No water company has gone through special administration. But the energy company Bulb was nationalised temporarily in 2022 after surging energy prices forced it into insolvency. That process ended up making the government money when energy prices returned to normal. Some of the most detailed cost estimates have come from consultants at Teneo hired by Thames Water. They said SAR would require as much as £4.1bn in funding from the UK government – seemingly a daunting addition to government debt. Yet the Teneo report and another prepared by consultants at Kroll make it clear they expect that burden to be temporary: even in the worst-case scenario, the government would eventually recover 100p in the pound. Dieter Helm, an Oxford University professor who has advised previous Labour and Conservative governments on energy and water policy, said: 'Whatever way it's done, it's pretty much inconceivable the government will not recover its costs.' Thames Water argued there would still be big extra costs of £51m a month as suppliers put pressure on and people leave the business – although many of these were forcefully disputed in court. Whatever the costs, they would be covered by the proceeds of an eventual sale out of SAR, with whatever is left shared out between the creditors. Such a sale does not seem impossible: the Hong Kong-based CK Infrastructure reportedly asked this month for its bid to be considered again. Helm has argued that the government should opt for SAR in order to prevent a free-for-all of special pleading from other water companies hoping to avoid fines. 'Every regulatory regime has to have a procedure for handling failure,' Helm said. 'Currently nobody knows what happens if you get into trouble. Nobody knows what happens if you play with the finances.' Charlie Maynard, the Liberal Democrat MP who intervened in the February court case and is appealing to the supreme court, wants Thames to be mutually owned by its customers after an SAR process to cut its debts. 'It's clear from Thames Water's own adviser that SAR will have a zero net cost so it is ridiculous that the government has not put the company into SAR already,' he said. 'SAR is the only way that the company will end up with a balance sheet strong enough to manage the material spending required over the next 10 or so years to get Thames Water's sewage system back in to shape and stop our rivers being filled with excrement.' One person with knowledge of the Bulb administration process said: 'Sorting out Thames Water in the public sector will be cheaper in the long run. The government definitely shouldn't be afraid.' Thames Water and the main creditors are strongly opposed to SAR. A Thames spokesperson said: 'An SAR doesn't fix Thames Water's problems. It will delay the delivery of improvement for our customers and the environment. It will be disruptive, add risk and uncertainty, increase costs, hinder our operational turnaround, destabilise our stakeholders and colleagues, and will not fix the balance sheet.' Creditors also have a lot to lose if forced to write off debts beyond the £6.7bn – or about 20p of every pound initially lent – they have offered to reduce Thames's financial burden. But under the worst-case scenario set out by Teneo, they could only receive 45p for every pound of debt. There are other arguments against SAR that the government may find compelling. One of the most notable is that Thames's operations are in need of a turnaround, so the prospect of the government owning every sewage overflow or flood may be unattractive. Trustees of the pension fund have also raised concerns. The Thames creditors also include some powerful investors who have told the government that imposing steep losses will make them much less willing to invest in Britain in the future. They argue that even if the government does not face any direct costs, the indirect cost will be much greater. On top of that, Thames and the creditors claim that any future owner will still require regulatory easements – leaving the government back where it started. A spokesperson for the creditors said Thames Water needed £5bn immediately and 'SAR is the wrong answer with a viable market solution on the table'. They added: 'Any exit from SAR will require regulatory support and SAR will only delay and increase the cost of the turnaround and leave customers and the taxpayer exposed to the continued risk of Thames Water's worsening environmental performance.' Thames Water has enough money to make it to next year at least, but eventually the creditors will have to either move forward with the takeover or pull out if they are not granted regulatory easements such as exemption from fines and prosecution during the turnaround. Some people expect litigation from creditors if it gets to SAR. However, the process gives the government, in tandem with the appointed special administrator, a lot of power, according to a senior restructuring lawyer close to the situation. 'It is very challenging for the creditors,' the lawyer said. The preferred option for the government is still a private-sector owner without government intervention. But if no deal can be reached, temporary nationalisation may be the only option left.
Bloomberg
3 days ago
- Business
- Bloomberg
Elliott's Italian Bank Is Said to Plan Offer for Banca Sistema
Banca CF+, an Italian financial services firm controlled by Elliott Management Corp., is set to launch an offer for Banca Sistema SpA, according to people with knowledge of the matter. The offer would consist of cash and shares of Banca Sistema's unit Kruso Kapital SpA, said the people, who asked not to be identified because the plan isn't public.
Yahoo
21-06-2025
- Business
- Yahoo
Will Elliott's Push Mean Break-up Boost for Phillips 66?
Following a recent proxy battle and boardroom fight, activist investor Elliott Management is well on its way to oversee an unlocking of substantial value trapped by Phillips 66's (NYSE:PSX) conglomerate structure. This article will look at what has happened between Phillips 66 and Elliott Management and what I expect to happen going forward. Phillips 66, which was spun off from ConocoPhillips (COP) in 2012 is operates in the Oil & Gas Refining & Marketing sector. The term Refining & Marketing can also be known as Downstream in the oil and gasindustry. As at the end of Q1 2025, Phillips 66 had five operating segments: Midstream, Chemicals, Refining, Marketing and Specialities, and Renewable Fuels. Warning! GuruFocus has detected 8 Warning Sign with PSX. By contrast, larger peer Marathon Petroleum (NYSE:MPC) has three operating segments: Refining & Marketing, Midstream, and Renewable Diesel. Its midstream operations are primarily conducted through MPLX (MPLX), a master limited partnership listed on the New York Stock Exchange under the ticker MPLX. Marathon Petroleum owns the general partner and a majority limited partner interest in MPLX. Valero Energy (NYSE:VLO), another PSX peer also has just three operating segments: Refining, Renewable Diesel, and Ethanol. If we look at ExxonMobil's (XOM) downstream business, which Exxon calls Product Solutions, it consists also of three segments: Energy Products, Chemical Products, and Specialty Products. Midstream companies tend to run as separate entities, operating in the Oil & Gas Storage & Transportation sub-sector. Examples would include MPLX, or Kinder Morgan (KMI), or Williams (WMB). So, a very simplistic view would suggest Phillips 66 operates in an unwieldy manner. This typically causes a conglomerate discount, which activist investor Elliott is known for attacking. According to Elliott's April 28, 2025 presentation titled Streamline 66: Elliott's Perspectives on Value Creation In September 2023, Elliott approached Phillips 66 with a clear message: its assets were significantly undervalued and underperforming. Initially, the Company acknowledged challenges, particularly in refining, reaffirmed its $14 billion mid-cycle EBITDA target and the Executive Chairman announced his retirement. Elliott released a statement stating the Company leadership deserved investor support so long as they demonstrated meaningful progress against their targets over the following year, but if performance did not improve more change would be needed. To support long-term value creation, Elliott sought to enhance the Board by adding two directors with relevant industry expertise. Yet cooperation quickly stalled. Despite the quality of the candidates proposed, Phillips 66 was slow to act and ultimately rejected several well-qualified individuals. Only after Elliott formally submitted nominations did the Company appoint Bob Pease to the Board in February 2024. In addition, throughout 2024 the Company's operating performance deteriorated and the Company continues to be woefully short of its EBITDA target. Since February 2025, Elliott has been more public about itsposition, with a campaign called Streamline 66. Its goals, according to the Perspectiveson Value Creation presentation, were fourfold: Improve accountability of Phillips 66's management by adding credible directors with a mandate for change Unlock substantial value trapped by Phillips 66's conglomerate structure Refocus the Company on operational excellence by adding deep industry expertise to the Board Instill a culture of ambition where Phillips 66 aims to be the top performing refining company in the world Elliott's core idea is that Midstream should trade at about 9-12x EBITDA, while Refining and Chemicals should trade at 6-7x EBITDA. Elliott notes that PSX trades like a refiner, therefore undervaluing the Midstreambusiness, due to a large conglomerate discount. Elliott is also saying that PSX's refining profitability dramatically lags peers. According to the Perspectives on Value Creation presentation, Elliott also used a third-party refining industry analytics firm, Baker & O'Brien and its PRISM Model to help understand the intrinsic profitability of Phillips 66's refinery assets relative to its actual results and peers. Before I came a full-time investor, I used to work in oil trading, and Baker & O'Brien PRISM Model was a sophisticated tool to understand how refineries could optimize their performance. So, it is quite impressive that Elliott has utilized this in their analysis of PSX's refining business. The Perspectives on Value Creation presentation slides 80 through 87 analyse PSX's regional competitiveness and concludes that PSX's refining assets are comparable to peers Marathon and Valero its underperformance is primarily driven by pooroperational execution, rather than the quality of the assets. But why should we care about what Elliott thinks? Well, Elliott has recent form in Refining & Marketing where it started an engagement with Marathon Petroleum in 2019 which resulted in a new executive leadership, the saleof Speedway to 7-Eleven for about $17 billion, and improved operating performance with proceeds used to repurchase its own shares. The stock has risen dramatically in the last five years. Elliott also pushed other large companies to realize value from their conglomerate discounts. Two recent examples I have followed include GSK plc (GSK) where in 2021 it called for a full separation of its Biopharmaand Consumer Health businesses, resulting ultimately in Haleon plc (HLN) being spun out into an independent Consumer Health business. In 2017 Elliott began pushing for BHP plc (BHP) to unify its dual-listed structure and for the metals and mining company to exit its petroleum business. By 2021, BHP moved its primary listing to Sydney, removing its complex dual-listed structure, and became a more streamlined and focused mining company, returning substantial funds to shareholders. Following more than a year of apparently contentious engagement, Elliott started a proxy fight to replace four board members at the 2025 shareholder meeting. While the campaign was backed by the three main proxyadvisory firms ISS, Glass Lewis and Egan-Jones, Phillips 66's largest passive investors (BlackRock, Vanguard, State Street), who sided with the company. This is likely because many of the shares held by BlackRock, Vanguard, State Street are in index tracking vehicles PSX is a S&P 500 constituent and they don't tend to ever vote against managements. In my opinion each of the four board members Elliott was proposing were highly qualified to sit on the board of a Refining & Marketing company. On May 21, 2025, the proxy contest concluded with a split result. Elliott won two board seats for Sigmund Cornelius and Michael Heim and PSX won the other two seats, for Bob Pease and Nigel Hearne. The case of Bob Pease is interesting. He was originally blessed by Elliott joining PSX's board in February 2024, but a year later, Elliott wanted him replaced. In a letter to shareholders Mr Pease said I do not know why Elliott now wants me off the Board. But Elliott wrote in its Perspectives on Value Creation presentation that Mr. Pease has failed to acknowledge Phillips' clear performance issues and has adopted the Company's empty,self-congratulatory rhetoric. GuruFocus News also noted that a proposal to "declassify the Board of Directors over a three-year period was not approved" by the shareholders. Also, a non-binding shareholder proposal requesting the Board toadopt a policy requiring directors to submit a resignation letter effective at the next annual meeting was not approved. Elliott wanted PSX to have board membership voted on each year, as is best practise for corporate governance but this was rejected in the vote. Elliott in a press release following the vote said it will continue to actively engage with the Company while holding management and the Board accountable for delivering on their commitment to improve shareholdervalue. As we have seen before, Elliott is a patient activist investor. The two board members they have managed to get on the board Sigmund Cornelius and Michael Heim are industry veterans. Cornelius is a former Chief Financial Officer of ConocoPhillips, and was previously on the board of Chevron Phillips Chemical Company, now a PSX joint venture with Chevron (CVX) which Elliott wants PSX to divest. Cornelius in an Elliott presentation said of his priorities upon joining the board: It's a different structure than Marathon or Valero and they have been the better performers. I will insist that we take a harder look at this structure. Heim is one of the founders and former President and Chief Operating Officer of Targa Resources (TRGP) which is an important midstream company and one of the New York Stock Exchange's largest stocks in the Oil & Gas Storage & Transportation subsector. Heim served in numerous executive leadership roles over the course of over 16 years at Targa and said in an Elliott presentation Midstream businesses can be growth engines, but they need the right structure to compete. Phillips' midstream business is constrained in so many ways in the current structure. I think people will be amazed at what is possible with these assets. So, it's clear to me that Elliott will still push hard for a separation of PSX's midstream segment. With a consensus Midstream segment EBITDA of about $4.1 billion, and at a 9.7x multiple Elliott sees Midstream achieving gross proceeds of about $39.5 billion. The TEV/EBITDA multiple of 9.7x is based on an average of Midstream peers Enterprise Products Partners (EPD), MPLX, ONEOK, Inc (OKE), and Targa Resources. It also sees a sale of CPChem grossing $13 billion, which is derived as a mid-cycle EBITDA of $1.9 billion at a TEV/EBITDA multiple of 6.4x using Dow Inc (DOW) and LyondellBasell Industries (LYB) as peers, plus $750 million in saved outlay on capex for a CPChem expansion project. On Elliott's calculations (slide 133 of Perspectives on Value Creation) PSX could be worth between $151 and $169 per share in the near term, based on a sum of the parts valuation: Source: Elliott's Perspectives on Value Creation, April 28, 2025 / The City LetterNote that PSX announced in May it is selling JET business in Germany and Austria $2.8 billion enterprise value, which is close enough to Elliott's $3.0 billion enterprise value assumption. This sale is an indication that PSX is already taking on board some of Elliott's demands. Assuming PSX spins Midstream at $39-40 billion, then the key for the $169 price target is if PSX can achieve refining EBITDA per barrel at parity with Valero, based on 2026 expected throughput. The Baker & O'Brien refining assets analysis suggests that "the kit", the refinery systems themselves, can do this. It's now just a question of management ambition. It may have been better had Brian Coffman been nominated to the board, given his refining expertise, but I expect Elliott will monitor this and revisit it in the future if improvements don't start coming through. Phillips 66 has the GF Score of 72, which implies that the company is Likely to have average performance. Without Elliott shaking things up, that's probably what could be expected going forward. Meanwhile Marathon Petroleum has a GF Score of 80 and Valero Energy has a GF Value score of 78. PSX underperforms mainly because it scores a Growth Rank of 2/10. The Growth Rank is scored through revenue growth and EBITDA growth. PSX's lower growth rank aligns with Elliott's point that PSX has been underperforming and could do better with renewed management drive and better refining performance. Like Marathon Petroleum, PSX has a Moat score of 7, which means Entry-level wide moat, clearly possessing durable advantages This also confirms Elliott's thesis that PSX has a lot of potential if management can beshaken up. As minority investors, we can almost freeride on the back of Elliott. The only things to note are that Elliott could walk away at any time, although I think that is unlikely and that Elliott may have some macro hedges in place founder Paul Singer told the In Good Company podcast earlier this year that that is usually the case in their investments. This means Elliott may be less exposed to the macro risks that are inherent in PSX: refining and chemical margins and midstream volumes. So, any standalone investment, without hedges, would incur these risks. In my opinion, as part of a diversified portfolio, a minority investor can bear these risks and look torealize the significant upside that Elliott is looking to squeeze out, which at the time of writing is about 30%. Elliott has a strong track record of patiently encouraging and sometimes forcing companies to rid their conglomerate discount through business spin-offs and changes at the board and executive management level. The May 2025 annual shareholder vote was a partial victory for Elliott and I expect the new board members Sigmund Cornelius and Michael Heim to put forth the case to spin out the PSX Midstream business, which may take 12-18 months to fully execute. Investors can afford to wait for this value to be realized over time. PSX has an Altman Z-score of 3.43 which is strong and means there is no immediate financial danger. This article first appeared on GuruFocus. 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Yahoo
21-06-2025
- Business
- Yahoo
Former Centrica chief Laidlaw in frame to chair embattled BP
Sam Laidlaw, the former boss of Centrica, is among the candidates being considered as the next chairman of BP, Britain's besieged oil and gas exploration giant. Sky News has learnt that Mr Laidlaw is being considered by BP board members as a potential successor to Helge Lund, who announced in April that he would step down. BP's chair search comes with the £62bn oil major in a state of crisis, as industry predators circle and the pace of its strategic transformation being interrogated by shareholders. Elliott Management, the activist investor, snapped up a multibillion pound stake in BP earlier this year and is pushing its chief executive, Murray Auchincloss, to accelerate spending cuts and ditch a string of renewable energy commitments. Mr Lund's departure will come after nearly a quarter of BP's shareholders opposed his re-election at its annual meeting in April - an unusually large protest given that his intention to step down had already been announced. BP's senior independent director - the Aviva chief executive Amanda Blanc - is said to be moving "at pace" to complete the recruitment process. A number of prominent candidates are understood to be in discussions with headhunters advising BP on the search. Mr Laidlaw would be a logical choice to take the role, having transformed Centrica, the owner of British Gas, during his tenure, which ended in 2014. Since then, he has had a long stint - which recently concluded - on the board of miner Rio Tinto, which has been fending off activist calls to abandon its London listing. He also established, and then sold, Neptune Energy, an oil company which was acquired by Italy's Eni for nearly £4bn in 2023. Last December, Mr Laidlaw was appointed chairman of AWE, the government-owned body which oversees Britain's nuclear weapons capability. He also has strong family connections to BP, with his father, Christopher Laidlaw, having served as its deputy chairman during a long business career. One person close to BP said the younger Mr Laidlaw had been approached about chairing the company during its previous recruitment process but had ruled himself out because of his Neptune Energy role. The status of his engagement with BP's search was unclear on Saturday. Another person said to have been approached is Ken MacKenzie, who recently retired as chairman of the mining giant BHP. Mr MacKenzie headed BHP during a period when Elliott held a stake in the company, and is said to have a good working relationship with the investor. Shares in BP have continued their downward trajectory over the last year, having fallen by nearly a fifth during that period. The company's valuation slump is reported to have drawn renewed interest in a possible takeover bid, with rivals Shell and ExxonMobil among those said to have "run the numbers" in recent months. Reports of such interest have not elicited any formal response, suggesting that any deal is conceptual at this stage. BP is racing to sell assets including Castrol, its lubricants division, which could command a price of about $8bn. This weekend, BP declined to comment, while Mr Laidlaw could not be reached for comment.
