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Activist pressure

‘No decision’ on break-up of group says SSE

SSE

SSE will update in November (pic: Terry Murden)

Energy firm SSE said there has been “no decision” to break up the group, following a report that it would succumb to pressure from activist investor Elliot.

The Perth-based company said that, in line with its announcement in May, it will provide an update on its plans to further accelerate growth in its portfolio with its half-year Results in November.

This will include details of significantly increased capital investment for the period to 2026, sources of funding and the company’s vision for further growth into the 2030s.

Following recent reshaping of the group, SSE said its “clear strategic focus” is on renewables and regulated electricity networks, supported by carefully chosen businesses.

“SSE’s businesses have exciting growth potential aligned with net zero targets and share common capabilities in the development, construction, financing, and operation of low-carbon electricity infrastructure,” it said in a statement.

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SSE is currently building more offshore wind than any company in the world, expanding internationally, and investing in low-carbon electricity infrastructure.

“There has been no decision to break up the SSE Group. The board remains fully focused on strategic choices which will drive shareholder value from the wealth of net zero opportunities the Company is creating.”

Alistair Phillips-Davies, chief executive, said: “We have been making excellent progress with our clear net zero-aligned strategy, centred on electricity networks, renewables and other carefully chosen businesses that help provide the low-carbon electricity infrastructure that government and wider society requires.

“SSE is the UK’s national low-carbon energy champion, delivering for both our shareholders and society and we look forward to updating investors on our plans to accelerate growth and create value in due course.”

Market reaction

AJ Bell investment director Russ Mould says: “It’s increasingly fashionable for companies to be broken up as activist investors put pressure on businesses to extract hidden value. Not every campaign works, but activists have a pretty good hit rate.

“SSE has already gone through some steps to streamline its operations with the sale of its retail energy division, but Elliott Management believes it can go further by selling its renewable energy operations. 

“Having kept quiet for a while the market speculated on what might happen, SSE has now put out a statement saying there is no decision to break up its business.

“There are two ways to interpret this statement. On one hand, the words ‘there is no decision’ might imply that some consideration might still be given to a break-up – as in there is no decision yet.

“On the other hand, the company says it already has a clear strategy and has promised to give all the details on spending and the how this might drive growth at the half year results in November.

“It doesn’t want an activist investor getting in its way before investors have had a chance to digest the plan for future value generation.

“A lot of the big oil companies are in the market for renewable energy assets as they seek to transition away from fossil fuels, which means there would be eager buyers for SSE’s renewable energy operations.

“Activist investors are known for their persistence so one can be sure that Elliott won’t give up following the energy group’s latest statement.”



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