Anglo American boss defends £405m Sirius takeover offer as ‘fair and reasonable’ as backlash mounts
Anglo American has defended its £405million bid for struggling Yorkshire potash miner Sirius Minerals as it faces a mounting backlash over the takeover.
A day after one of the City’s best-known hedge funds joined retail shareholders in demanding a higher offer, Anglo chief executive Mark Cutifani insisted the deal is ‘fair and reasonable’.
The FTSE 100-listed miner has offered to buy Sirius for 5.5p per share in a rescue deal that would save it from almost certain collapse within weeks.
A day after one of the City’s best-known hedge funds joined retail shareholders in demanding a higher offer, Anglo chief executive Mark Cutifani insisted the deal is ‘fair and reasonable’
But Anglo is being put under growing pressure by private and institutional investors to increase the bid, which many believe is undervalued.
On Tuesday, Crispin Odey’s hedge fund Odey Asset Management described the offer as a ‘mockery’.
But Anglo has refused to consider increasing the price – and Cutifani yesterday said the price it has put forward is justified because of the amount of money it will take to develop Sirius’s part-built Woodsmith mine.
The 61-year-old said: ‘We understand that people are disappointed and the price is not what some people hoped for.
‘We understand the point, but it still needs about £2.6billion invested in it going forward. There’s still a lot of work to do on the marketing side.’
Located in the North York Moors National Park, close to the seaside town of Whitby, the mine needs two mile-deep shafts to access a deposit of agricultural fertiliser known as polyhalite.
Sirius began trying to raise money and support for the project back in 2011 – and it quickly built up a strong following among retail investors, many of whom are locals.
It had around 85,000 at the last count, holding almost 50 per cent of its shares.
Concerns are growing that anger among these shareholders – who face losing huge sums of money, and in some cases their life savings – could see them vote against the deal at a do-or-die vote on March 3. Anglo will need to clinch the support of 75 per cent of votes cast for its bid to go ahead.
The mine also promised jobs and an injection of cash into the local economy in one of the most deprived parts of Britain.
Asked whether Anglo was worried about whether it has gained enough support from the local community, Cutifani said: ‘We understand how important this project is to the community of North Yorkshire.
‘The most important thing is we can offer a lot more certainty to the local community by backing the project and throwing the full weight of Anglo’s balance sheet behind it.’
Anglo released its full-year results yesterday. It reported a 9 per cent rise in profits to £7.8billion in 2019, while revenue jumped 8 per cent to £23billion.
But its De Beers diamond division brought in the worst set of earnings since Anglo bought it in 2012. Revenue in the division plummeted 24 per cent to £3.6billion, while profits plunged 87 per cent to £36million.
Anglo shares climbed 1.7 per cent, or 34.5p, to 2122.5p.