Saga PLC’s (LON:SAGA) incoming chief executive Euan Sutherland is used to a bit of a battle from his time at Superdry as he is likely to face a skirmish or two from activist investors in his new role.
Activist hedge fund manager Elliott Management revealed in the summer that it had built up a 5% stake in the over-50s insurance and travel group.
Elliott’s record, seen at companies ranging from BHP to Whitbread, will give the former Co-op and Coca-Cola executive a good idea of what’s in store.
Sutherland arrives with Saga’s shares having lost around three-quarters of their value in the past two years as chief executive Lance Batchelor has tried to overhaul the group.
Strategic zigzagging has included shifting to selling third-party products, a VIP membership scheme to offset falling numbers of high-spending cruise customers and the launch this year of a new three-year fixed-price insurance product.
This year the shares have put the brakes on their decline, with Batchelor announcing his departure in June and the New York-based hedge fund’s arrival a month later.
The looming presence of aggressive Elliott on the share register may have been behind last weekend’s reports that even before Sutherland arrives in the new year, Saga is already mulling a potential sale of its domiciliary care arm.
As this is just a small part of the business, making £6mln of revenue in the first half of the year, the market seemed unimpressed.
History of badgering
Looking at Elliott’s history and some of the deals it has pushed for have been of a rather more dramatic nature.
Whitbread shareholders, for instance, celebrated a £2.5bn payday after the Premier Inn owner sold its Costa Coffee chain to Coca Cola.
At BHP, boss Andrew Mackenzie finally threw in the towel last month seemingly having had enough after two years of Elliott’s badgering.
The hedge fund, which is run by billionaire Paul Singer and his son Gordon, proposed that the mining giant should make a raft of changes, including demerging its oil business and rejigging its capital return policy.
Sutherland should be used to having a flea in his ear, having been criticised by Superdry's founder for presiding over “weakest” performance in the group's history, due to a “misguided strategy”.
At his previous job with the Co-operative Group, the Scotsman left after a bruising 10-month stint at a troubled group he called “ungovernable” when his £6.6m pay deal was leaked.