Hedge fund rebuffs 'unjust' takeover bid for Sirius Minerals

Crispin Odey’s asset management fund has rebuffed Anglo-American’s “unjust” takeover bid for Sirius Minerals, saying the £405m offer does not represent a fair price for shareholders in the troubled fertiliser miner.

Odey Asset Management, which owns 1.29% of Sirius, said it would vote against the mining giant’s 5.5p-a-share bid for the company, which plans to dig the UK’s first deep mine in 40 years under the North York moors.

In an open letter to Anglo’s boss, Mark Cutifani, and Chris Fraser, the chief executive of Sirius, the London-based hedge fund argued that Anglo had stopped short of making a “final” offer so that it could raise its bid to see off any potential counter bid for the company.

Odey said it believed Anglo would be willing to “bid substantially more” for Sirius if a counter bid for the company emerged, which it said proved that the existing offer did not represent a fair price for the company.

“It is Odey’s belief that Anglo American’s current offer does not represent fair value for shareholders in Sirius,” said the letter, which was signed by Odey’s fund manager, Henry Steel. The hedge fund said it would vote against any offer that was not final or that was less than 7p a share.

The existing takeover offer would wipe out the investments of many local shareholders, but it still won the support of the Sirius chairman, Russell Scrimshaw. He said last month it was “the only viable proposal” to save the company’s multibillion-pound project to develop the Woodsmith fertiliser mine under the North York moors.

Sirius’s shareholder base includes thousands of investors from the Yorkshire area who supported its ambitious plans to become the world’s biggest producer of a potent fertiliser called polyhalite.

The company was once valued at £1.5bn and managed to raise $1.2bn (£920m) to develop the Woodsmith mine, but it ran into trouble finding investors to hand over a further $3.8bn to complete the plans.

Odey said the project could still prove to be lucrative for an investor willing to fund the development costs of the Woodsmith mine. It claims recent company accounts suggest that the business could be worth £895m if it finds funding – more than double Anglo’s bid.

“Odey struggles to see how the board of Sirius, including the chief financial officer, can recommend the offer to shareholders as being ‘fair’ only four months after these accounts were published,” the letter said.

Shareholders will vote on 3 March on whether or not to accept Anglo’s offer, which needs at least 75% in favour to move ahead.