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ECONOMY | 23-04-2020 12:32

France fines US hedge fund Elliott over takeover fight

French markets regulator imposes 20-million euro fine on US hedge fund Elliott Management, accusing it of "inaccuracies" during its bid to block a takeover deal five years ago.

The French markets regulator said Wednesday that it had imposed a 20 million euro fine on US hedge fund Elliott Management, accusing it of "inaccuracies" during its bid to block a takeover deal five years ago.

Elliott, run by top Republican donor Paul Singer and no stranger to Argentines, was also found to have obstructed the inquiry launched by the Autorite des Marchés Financiers (AMF) after the battle.

With a value equivalent to US$21.8 million, it was the highest fine ever handed out by the AMF, matching recent penalties for Morgan Stanley and the French bank Natixis in separate cases.

In 2015, Elliott started buying up shares in Norbert Dentressangle, a French shipping and logistics group that was the target of a takeover offer from its American rival XPO.

The AMF said Elliott misled regulators by saying it had used contracts for difference (CFD), a derivative financial instrument settled in cash, to acquire its 9.2 percent stake big enough to block the full takeover.

But Elliott had in fact used equity swaps, settled in shares, and later failed to declare on time its intentions in the takeover battle.

"The inaccurate reportings... were intended to conceal from the market, for as long as possible, the strategy of blocking the squeeze-out offer in order to negotiate a reassessment of XPO's offer price," the regulator said.

Elliott's moves set off a legal battle that ended only last year, when the fund agreed to sell XPO its stake at a 20 percent premium to the original offer price.

It was the AMF's second big fine against Elliott: In 2014, it ordered a 16 million euro penalty – a record in France at the time – over an insider trading case.

Singer, the fund's founder, has a long history of buying stakes in companies and then aggressively pushing for changes since 1977, and now has around US$40 billion under management.

Elliott was also one of the so-called "vulture funds" that bought up sovereign debt issued by Argentina after its devastating economic crisis and default in 2001, sparking a dispute that was settled only 15 years later with payouts totalling more than US$9 billion.

Most recently, Elliott acquired a stake in Twitter shares, which US media reports said was part of a campaign to force out its CEO Jack Dorsey.

Last month, Dorsey said he was reconsidering his plan to spend up to six months a year working from Africa, reportedly in response to Elliott's pressure.

by Anne Padieu, Agence France-Presse


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