Elliott Urges Saga to Explore Options Including Breakup

(Bloomberg) -- Elliott Management Corp. wants Saga Plc to explore options to boost returns for shareholders, including potentially separating its insurance and cruise businesses, according to people familiar with the matter.

The New York hedge fund, run by billionaire Paul Singer, disclosed earlier Wednesday that it holds 5.1% of voting rights in the company through financial instruments. Shares extended gains and rose as much as 10% in London, the most since July 4th, after details of Elliott’s strategy emerged. Saga is valued at about 516 million pounds ($640 million).

Elliott believes the company is undervalued and that the various businesses, in particular the insurance unit, have underperformed in recent years due to mismanagement, said the people who asked not to be identified because the matter is private. The firm believes both the insurance and cruise businesses are well-regarded by consumers but don’t necessarily need to continue to operate under the same umbrella, they said.

“We have good and open relations with all of our shareholders and expect to be in contact with Elliott shortly," a representative for Saga said in an emailed statement. Elliott declined to comment.

Saga is currently looking for a new chief executive officer after Lance Batchelor said he planned to retire in January 2020. The supplier of financial services and cruises to people over 50 years of age also cut its dividend and warned in April that profit will fall this year.

Saga started out in 1951 as a seaside hotel, before venturing into foreign holidays, insurance and financial services. Prolonged uncertainty around the U.K.’s exit from the European Union has hit holiday bookings, which are down for the coming year.

Saga is trying to rebrand itself and is introducing new products in its insurance business to fend off pricing pressure.

“Sophisticated activist are stepping up pressure in the U.K. and Europe,” Darren Novak, head of activist defence at UBS Group AG, said in a separate interview today, declining to comment on Saga specifically. “Investors use companies’s stock price dislocations and strategic pivots as launch pads for campaigns."

To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net;Jan-Henrik Förster in London at jforster20@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Fion Li

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