Hedge Fund Elliott Pushes Saga To Jettison Care-giving Unit

December 9, 2019 | Activist Updates

It was a highly lopsided match anyway. However, in a peace offering to activist Elliott Advisors, Saga is putting its care business up for sale.

Saga is reportedly working with accountants Grant Thornton to sell its Saga Healthcare unit. The business comprises the Country Cousins, and Patricia White’s branded care services.

The specialist over-50s unit, which has 1,500 care-givers on its books, earned revenue of £6 million in the first half of the year.

According to Sky, Saga decided that Patricia White’s and Country Cousins are non-core assets.

However, note that Saga is continuing with trials of its own-branded domiciliary care business.

Elliott invested in Saga at a price trough

Activist investor Elliott Advisors (the UK part of the $34 billion US hedge fund) bought 5% in Saga in July this year. At the time, Saga’s market capitalization was a mere £550 million. Share prices were down 75% from a share float in 2014. Saga is a travel and insurance company that also operates cruise ships.

Elliott’s intentions are not yet specified. However, Saga chief executive said in September that the board had met with representatives from Elliott, but just as part of the “normal course of business.”

Meanwhile, the market has ascribed various motives to Elliott, including a plan to split up Saga’s insurance and travel businesses. It’s a moot point whether that would work out beneficially for Saga’s shareholders.

According to analyst Edward Morris of JP Morgan, marketing multiple products under an umbrella brand was a sound strategy for Saga.

He said: ‘The Saga brand is somewhat unique and while its effectiveness has diminished in recent years we do continue to believe that [the strong brand] allows the company to earn superior margins to the market average on each side of its business.’

However, the travel business is evidently under a cloud.

In September Batchelor said that “in tour operations and land base holidays, the industry is under a lot of pressure.”

[Related Story: Elliott Management Tells Marathon Oil to “Split Into Three” ]

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