Activist investor Eric Knight just got a little less active. In January, Knight abandoned his ten-month campaign against the planned merger of French utility Suez and state-owned Gaz de France after Suez shares approached his target price of E40 ($51) per share, giving him the opportunity to sell his stake and get out. “Mission accomplished,” says Knight, 47, “I’m very happy.”
The Knight Vinke Asset Management fund started buying shares in Suez three years ago, when they were worth less than half their current value. When the French government backed a plan to merge Gaz de France with Suez, Knight argued that the deal undervalued Suez shares. He placed about a dozen advertisements in French newspapers to pan the idea before finally selling his 0.8 percent holding. He says Knight Vinke had earned an internal rate of return of 60 percent from its Suez stake over the past three years, making it the best performer since the fund’s 2002 launch.
Just before Knight sold his stake, Suez shares had risen following rumors of a rival bid for the company from French businessman François Pinault. Later, Pinault’s investment company, Artemis, said it would not be bidding for Suez, and the utility’s share price fell.
Court rulings have delayed the SuezGaz de France merger until July, and Socialist presidential candidate Ségolène Royal has said she will block the deal if she’s elected in the spring.
Meanwhile, Knight’s attention has turned elsewhere. Hoping to double Knight Vinke’s assets under management, to almost E2 billion, he has started investing in four targets in Europe. “But I’m not disclosing any of our positions,” he says.
