Elliott said that one of the largest U.S. utility companies should be divided into three parts

The radical hedge fund Elliott Management called on Duke Energy to consider dividing it into three separate companies for its first large-scale public offering to overhaul one of the largest U.S. utility companies .

Elliott said it had acquired an unspecified stake in Duke University, which provides electricity to 7.8 million people in the southeastern and midwestern United States, and accused them of “building an empire” in a letter from Zhou’s management. .

“Based on an extensive analysis of Duke’s business, we believe that Duke should conduct a thorough and impartial review of the division of tax exemptions into three regionally focused, publicly traded utility holding companies,” Carolina, Florida And the Midwest. Senior portfolio manager Jeff Rosenbaum and managing partner Jesse Cohn.

Elliott is a $42 billion fund whose recent aggressive activities have targeted BHP Billiton, SoftBank and Whitbread.The agency stated that the review should be led by an independent board committee, including new independent directors, and assisted by external consultants

The hedge fund did not disclose the size of its holdings in Duke University. The Wall Street Journal initially reported the size of the hedge fund. But it said it was the top ten investors.

Duke University (Duke) said it will review these proposals, saying they are the latest proposal made by Elliott since July 2020.

Duke Energy stated: “Throughout the process, the Duke Energy Board of Directors has thoroughly reviewed their recommendations and determined that they are not in the best interests of the company, its shareholders and other stakeholders.”

The hedge fund’s “decisive performance” in the utility sector also surprised it. The company had previously acquired shares in Sempra Energy, FirstEnergy and Evergy in the company.

Duke said: “Since Elliott (Elliott) intervened, the share prices of these utilities have so far lagged behind the industry in performance and have established an enviable record of undermining shareholder value.”

The aggressive public exchange heralded a struggle for shareholders, hoping that Duke’s strategy and performance would be desirable under the leadership of long-time CEO Lynn Good.

Elliott believes that despite holding a portfolio of “top” utilities, the company has “suffered many operational setbacks, investment and strategic errors in the past decade, which are a heavy price for shareholders and customers.”

The “mistakes” mentioned by Elliott included the cancellation of the Atlantic Coast Pipeline, a 600-mile natural gas pipeline developed with Dominion Energy.this project Closed last year After a series of delays and legal challenges, costs soared. This triggered a $2.1 billion write-down by Duke University.

Elliott also pointed to the cost of the coal ash leak in 2014 and called it an “overvalued” acquisition of Piedmont natural gas in 2016.

Elliott said the company “focused more on increasing business scale and investment portfolio rather than business execution and prudent investment, which led those who followed the company to believe that Duke was sacrificing shareholder value.” Build an empire'”.

The hedge fund said the spin-off could create a “short-term sight” of between US$12 billion and US$15 billion for shareholders.

On Monday, Duke’s stock rose 0.7% in a declining market. A person familiar with the matter said the company rejected a merger offer from Florida utility and power producer NextEra Energy last year.

Duke University’s move was Elliott’s second large-scale bargaining campaign, which only surfaced more than a month later.Hedge funds have also established a Billions of pounds in shares At GlaxoSmithKline, the British drugmaker lags behind its peers and lags behind its competitors in the race to develop a Covid-19 vaccine, which opens a potential battle for the drugmaker’s future .