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Chris Hughes

Elliott Tilts at a Chinese Windmill

The hedge fund has identified the remedy for what ails Portuguese utility EDP. Whether it can change minds in Beijing is another matter.

Ripe for change.

Ripe for change.

Photographer: Mario Proenca

To Iberia, the site of Elliott Management Corp.’s latest, and suitably quixotic, activist campaign. Armed with a 3 percent interest in Portuguese utility Energias de Portugal SA, the hedge fund has written to the board to oppose the 9.1 billion euro ($10.3 billion) takeover proposal from China Three Gorges Corp. Elliott has outlined a defense strategy that would have been better coming from EDP itself, and other shareholders can be grateful.

Three Gorges made an low offer in May in the hope of taking its 23 percent stake over 50 percent, saying it wanted to take control and inject some of its own assets while keeping EDP listed in Lisbon. The target rightly said the premium, just 5 percent, was too low and raised questions about how the combination would work. Since then it’s gone eerily quiet. Whether the delay is caused by slow regulators or a hesitant Three Gorges, the specter of a takeover makes it hard for life to be business as usual.