LONDON – London-based hedge fund Odey Asset Management said it would oppose Anglo American's bid to acquire a huge fertiliser project from Sirius Minerals at 5.5p a share, saying the terms do not represent fair value.
The asset under a national park in North Yorkshire is Britain's biggest mining project and has political resonance as the government works to create more jobs in the economically-disadvantaged north of the country.
Its future was in jeopardy until major miner Anglo American made its bid for the project whose viability some analysts have questioned, but Odey said Anglo's offer was too low.
In an open letter, Odey, which held a 1.29% economic interest in Sirius as of February 18, said it would vote in favour of any bid at 7p a share or above.
"The lack of 'final' offer, in Odey's opinion, suggests that Anglo American would be willing to bid substantially more for Sirius, with the investment case remaining highly attractive for Anglo American, even at a materially higher bid level," the hedge fund said in the letter.
A spokesman for Anglo American declined to comment and Sirius had no immediate comment.
Anglo American agreed last month to buy Sirius Minerals for 404.9-million pounds ($526.2 million) in cash, marking the global miner's return to fertilizer and throwing a lifeline to Sirius.
Sirius chairman Russell Scrimshaw said then that if the bid were not approved, there was a high probability the business could be placed into administration or liquidation within weeks.
Odey said on Wednesday the offer seems "to make a mockery of both internal and external audits at Sirius".
Sirius Minerals struggled to find financing in private markets and last year scrapped a plan to raise $500 million in a bond sale.
Its share price has fallen by around 75% since the start of 2019 despite a bounce when news of the Anglo American bid broke. By 09:38 GMT on Wednesday, the stock had rallied slightly to trade nearly 1% higher at 5.18p, roughly in line with the broader market
The share price fall has hit many local people who invested in the plan to develop what Sirius has said is the world's largest deposit of polyhalite, a multi-nutrient fertiliser.
Anglo American, in announcing its bid for Sirius, said it was taking advantage of a rare chance to buy near the bottom of the market, but some analysts are sceptical, saying there is no established market for polyhalite.