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Elliott says one of America’s biggest utilities is to be split into three

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Activist hedge fund Elliott Management has asked Duke Energy to consider splitting it into three different companies to launch its first public bailout in a campaign to renovate one of the largest U.S. companies.

Elliott said he has taken an unspecified stake in Duke, empowering 7.8 million people in the southeastern and midwestern U.S. states, and in a letter to management on Monday accused them of “building the empire.”

“Based on Duke’s extensive analysis of business, we believe Duke should conduct an in-depth and unbiased review of the tax-free distinction in regionally focused and publicly traded instruments: the Carolinas, Florida, and Midwest,” wrote Elliott Jeff Rosenbaum, CEO. and Jesse Cohn, managing partner.

Elliott – a $ 42 billion fund that has targeted recent entrepreneurial campaigns aimed at BHP, SoftBank and Whitbread, among others – said the review should be led by an independent board of directors, including new independent directors, with the help of outside advisers.

The hedge fund did not disclose the size of Duke’s stake, The Wall Street Journal initially reported. But he said he was the top 10 investors.

Duke said he will consider the proposals, saying they are the last of the series presented by Elliott from July 2020 onwards.

“Over time, Duke Energy’s board of directors has thoroughly reviewed their proposals and decided that they are not in the best interests of the company, its shareholders and other stakeholders,” Duke said.

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The expansion fund also achieved “tremendous mixed results” in the utility sector, having previously taken stakes in Sempra Energy, FirstEnergy and Evergy.

“The share prices of these utilities have been materially bad in the sector since Elliott became involved, setting an unenviable trajectory to destroy shareholder value,” Duke said.

An aggressive public exchange heralds a fight to scare shareholders over Duke’s strategy and performance merits under longtime CEO Lynn Good.

Elliott argued that despite having a “high-end” public service portfolio, the company “has had numerous operational hurdles and investments and strategic steps over the past decade that have been costly to shareholders and customers.”

Among the “wrong steps” Elliott mentioned was the destruction of the Atlantic Coast Pipeline, a 600-mile pipeline that was being developed in conjunction with Dominion Energy. The project fell last year after some delays and legal challenges the costs went up. Duke resigned for $ 2.1 billion.

Elliott also noted the cost of the 2014 coal ash spill and said it was an “excessive price” to buy Piedmont Natural Gas in 2016.

Elliott said, “The focus has been on increasing the footprint and portfolio rather than execution and prudent investment, which among those who follow the company perceives that Duke is” building the empire “to the detriment of shareholder value.”

A division could create a “near-term value of vision” for shareholders between $ 12 billion and $ 15 billion, the hedge fund said.

Shares of the shares rose 0.7 percent in the market that fell on Monday. The company last year rejected NextEra Energy’s offer to unify the production of power and electricity companies in Florida, according to a person familiar with the dispute.

Duke’s move is Elliott’s second piece to build a large-scale stake, which he released in less than a month. It has also built hedge funds a million-pound stake At GlaxoSmithKline, he sets out on a potential fight for the future of the UK drug manufacturer after getting worse results than his peers and falling behind in the race to develop the Covid-19 vaccine.

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