Energy
Wednesday, November 29th, 2023 3:19 pm EDT
Key Points
- Elliott Investment Management’s $1 Billion Stake in Phillips 66: Elliott Investment Management has acquired a $1 billion stake in Phillips 66, a U.S. oil refiner and pipeline operator. The activist investment firm is urging Phillips 66 to restructure its board to address its underperformance.
- Elliott’s Call for Board Revamp and Improved Stock Performance: In a letter to Phillips 66’s board, Elliott emphasizes that the company’s stock, currently trading around $118 per share, has the potential to reach $200 with necessary improvements. While acknowledging sensible performance targets set by management, Elliott suggests that additional help is needed to achieve the company’s full potential.
- Phillips 66’s Lagging Performance and Response: Phillips 66 has underperformed compared to its U.S. refining rivals, and its second-quarter earnings fell short of Wall Street estimates. The company’s executives have outlined a plan to enhance returns through cost-cutting and potential asset sales or spin-offs amounting to $3 billion in the coming year. Phillips 66’s CEO, Mark Lashier, has acknowledged discussions with Elliott but hasn’t confirmed the company’s stance on adding the two directors recommended by Elliott. The stock rose 3% to $121.51 following news of Elliott’s involvement, and prior to the letter’s release, Phillips 66 stock had a year-over-year gain of 8.3%, compared to a 21.5% gain at its larger rival, Marathon Petroleum. Investors have reportedly lost confidence due to underperformance in refining and perceived poor execution on cost-reduction efforts, according to Elliott.
Elliott Investment Management has disclosed a $1 billion stake in Phillips 66 and is urging the U.S. oil refiner and pipeline operator to revamp its board to address its lagging performance. In a letter to Phillips 66’s board, Elliott expressed confidence that the stock, currently trading around $118 per share, could reach $200 with improvements. The activist investment firm criticized Phillips 66’s refining operations, pointing out a history of failed execution and a lack of focus on controlling operating expenses. Elliott suggested appointing two new directors with refining-operating experience to enhance the board’s expertise in this area. Phillips 66’s CEO, Mark Lashier, acknowledged discussions with Elliott but did not confirm the company’s openness to adding the recommended directors. The move by Elliott follows Phillips 66’s second-quarter earnings missing Wall Street estimates, and the company’s plan to boost returns through cost-cutting and potentially selling or spinning off $3 billion in assets next year. Phillips 66’s stock rose 3% to $121.51 following news of Elliott’s involvement.
For the full original article on REUTERS, please click here: https://www.reuters.com/markets/deals/elliott-acquires-1-bln-stake-phillips-66-cnbc-2023-11-29/
