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Activists turn up the pressure in wave of agitation

A renewed spate of activist investor posturing has ramped up pressure even on the UK's biggest ever corporate deal
July 28, 2016 & Kirsty Green

The biggest deal in British corporate history was under renewed scrutiny as a wave of pressure from activist investors sweeps the UK's stock market.

IC TIP: Hold

Activist hedge funds including Elliott Advisors, the UK arm of US group Elliott Management, and The Children's Investment Fund have been pushing for improved terms on Anheuser-Busch InBev's (ABI) planned takeover of its next largest rival SABMiller (SAB) due to the fall in sterling.

The pressure led to ABI upping its bid by £1 per share to £45 a share, which values SAB at £79bn, but Aberdeen Asset Management (ADN), a major SAB shareholder, has shown its activist teeth by saying the revised deal "remains unacceptable" because it "undervalues the company and continues to favour SAB's two major shareholders", Altria and BevCo. A mostly stock alternative, now worth £51.14, is likely only to appeal to those two shareholders given the shares won't be tradeable for five years and it reduces their tax liability.

"We have engaged with SABMiller's board on the differential treatment of shareholders since the deal was first constructed," Aberdeen said. "The way that the value of the partial share offer has diverged from the cash offer has compounded our discomfort."

SAB said it had engaged an additional financial adviser, Centreview Partners, and would be consulting with shareholders before making an announcement.

All this came in a week when Speedy Hire (SDY) was also targeted by activist asset manager Toscafund.

Shares in the support services group have plunged almost 60 per cent since their 2014 high following accounting irregularities at its overseas division two years ago and recent profit warnings.

The company released a more reassuring update this month, but a demand from Toscafund, which owns nearly 20 per cent of Speedy, for a general meeting to remove executive chairman Jan Åstrand has put renewed pressure on the group.

Toscafund wants to replace Mr Åstrand with turnaround specialist David Shearer, who would become a director if elected. It argued in a letter that Mr Åstrand's role as executive chairman was "incompatible" with the UK Corporate Governance Code, given the company has a chief executive and claimed he had "damaged potential shareholder returns".

Toscafund said Mr Åstrand performed a U-turn on plans to merge with another hire company - something that Toscafund believes would be in Speedy's best interests. The activist did not name the target, but it is understood to be HSS Hire (HSS), a deal speculated about in the press but denied by Speedy management in December.

Speedy said a meeting would be convened in the next few weeks and would take place within four weeks of that date. It advised shareholders to take no action.