On Tuesday, investors vote on one of the most contentious takeovers the UK has seen in the last decade.
Sirius Minerals PLC (LON:SXX) shareholders will decide whether to accept a takeover offer from global mining giant Anglo American plc (LON:AAL) or let the troubled fertiliser company carry on its own towards an uncertain future.
Cash-strapped Sirius, once seen as the promising developer of a polyhalite project in England, has a vast pool of private investors: half of its shares are owned by 85,000 individuals some of whom claim to have poured their lifetime savings into the project.
Protests against the Anglo offer have been growing with the thrust that at 5.5p per share, or £405mln in total, it “significantly” undervalues the firm.
Only last year, the stock was changing hands at 20p.
On the opposite side, the board says it is the only solution against bankruptcy, while industry groups have been pushing it in the interest of the local economy.
Combined, the directors own just below 2.5% of the company.
Sirius chairman Russell Scrimshaw admitted the offer is not what anyone had hoped for, but if it is not approved the company would go bust “within weeks”.
“[If not approved] would most likely result in shareholders losing all of their investment, as well as put the future of the entire project, and its associated benefits for the local area and the UK, at risk,” he said in January.
“This offer... will result in significant losses for the vast majority of shareholders,” said ‘Fund Sirius Minerals’, a campaign set up by a band of private investors looking to provide an alternative solution.
“The effect of these losses will be life savings and pensions devastated for tens of thousands of private individuals.”
In response to the bid, the activists have set out a plan to raise £460mln through bonds to fund the company for another two years.
With the extra £460mln, Sirius could lay out “critical infrastructure development” all the way through 2022.
The sum came up in a strategic review carried out in September.
However, the troubled fertiliser company could not find that money and recommended shareholders to approve the takeover by Anglo American instead.
“At no point during or following the strategic review did Sirius reach out to private investors to request their support with the funding, despite them owning 50% of the shares in Sirius,” the action group said.
“We believe that this was an error on the part of Sirius and a missed opportunity to raise the funds and protect shareholders’ existing investments.”
So far, the initiative has surveyed over 1,700 people, who have shown interest in providing a total of £42mln.
Another strong presence in the Sirius saga has been Odey Asset Management.
The hedge fund has been on a shopping spree in February, upping its stake six times over the course of two weeks, all at a discount to Anglo American’s offering price.
It now owns 1.52% of Sirius and has also openly criticised Anglo's offer at the current price, saying it might fail or be derailed by a third party.
The lack of a ‘final’ offer, in Odey’s opinion, suggests that Anglo American would be willing to bid substantially more for Sirius.
"The investment case remains highly attractive for Anglo American, even at a materially higher bid level,” the fund manager said last month.
But the mining giant reiterated in mid-February that the £405mln offer is “fair and reasonable” and an active fertiliser mine would benefit the area significantly.
"We understand how important this project is to the community of North Yorkshire.
“If we are successful, we bring certainty that at the moment is not there for the project and the community,” chief executive Mark Cutifani told The Times.
The vote takes place on Tuesday (3 March) at 11am at the Honourable Artillery Company, Armoury House, City Road, London.