Scottish Daily Mail

Activist investor demands seat on Rolls-Royce board

- By Emily Davies

ROLLS-ROYCE was feeling the pressure last night after activist investor ValueAct almost doubled its stake in the firm, just one week after the enginemake­r’s fifth profit warning.

The largest shareholde­r in the group raised its stake to 10.01pc, from 5.4pc, leaving it with a stake in the company worth £11.8bn.

The San Francisco-based hedge fund has now asked for a seat on the board.

Rolls-Royce, the leading manufactur­er of passenger jet engines, has seen its shares plunge from almost £13 two years ago to just 541p when the markets closed yesterday.

Over a tumultuous 18 months it has issued five profit warnings and downgrades.

Pressure has been mounting on chief executive Warren East, who joined the group in July.

A Rolls-Royce spokesman said: ‘ValueAct has made a request for a seat on the board but no decision has yet been taken.’

Rolls’ management and ValueAct are understood to have met for ‘constructi­ve’ talks since the latest profit warning.

ValueAct has a large enough stake for it to call for an extraordin­ary general meeting and prompt a vote on it getting a board seat, although it is not thought to be pursuing that option. East has previously hinted at a reluctance for the activist investor to join the board, citing that the company’s customers and the interests of other investors must be considered.

An update on the company’s structure and operations is due on Tuesday, and is expected to streamline management and make engineerin­g staff work more efficientl­y.

ValueAct has pressed for changes at 75 companies since Jeffrey Ubben launched the firm in 2000, according to Bloomberg.

A spokesman for Rolls-Royce said: ‘We are in regular contact with ValueAct, as we are with all our major shareholde­rs.

‘We have a common interest in returning Rolls-Royce to profitable growth.’

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