Elliott Management launches bid to overhaul Sempra Energy

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Sempra on Monday said its board and management would review the letter and presentation sent by Elliott and Bluescape.

“Sempra Energy is committed to an open dialogue with all shareholders and considers investor perspectives in the context of the company’s existing strategy and opportunities to deliver long-term shareholder value,” it said in a press release.

Together, Elliott Associates, Elliott International and Bluescape said Monday they hold a 4.9 percent stake in Sempra worth $1.3 billion.

Elliott and Bluescape have already partnered to turn around two other power market players, NRG Energy and FirstEnergy. Shares of NRG have more than doubled since Elliott revealed its stake in the company in January 2017. FirstEnergy’s stocks price is up nearly 14 percent since Jan. 22, 2018, when Elliott and Bluescape announced an investment in and advisory role with the Akron, Ohio-based utility.

On Monday, shares of Sempra Energy surged about 15 percent, likely reflecting investor confidence in Bluescape’s chairman. Wilder is known for shaping up Texas utility TXU and selling the company in the largest-ever leveraged buyout in 2007. He is also familiar with Sempra’s Oncor business, which was spun out of TXU in 2002.

The preliminary plan at Sempra is to replace six board members and form a strategic review committee to conduct a “no stone unturned” review of Sempra’s portfolio and operations.

Elliott and Bluescape say Sempra’s stock price underperformance boils down a failed strategy to build a power market conglomerate. Its acquisition of “valuable but divergent businesses” has led to a lack of focus that yields operational problems.

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