Hedge fund Elliott, which holds a 15 percent stake in German machine-tool maker DMG Mori Seiki AG, is not seeking a seat on the supervisory board, DMG said on Tuesday, contrasting with the activist fund's strategy for some of its other investments. However, Elliott would probably make a suggestion if asked to nominate a board member, a person familiar with the hedge fund's thinking said.
Japan's DMG Mori Seiki Co Ltd has recently acquired a 52.5 percent stake in DMG Mori Seiki AG, and Elliott built its stake during the tender offer process. According to the person familiar with its thinking, Elliott considers itself a long-term investor, with a view to keeping its stake for a period of say 3-5 years. Unlike previous instances when Elliott has fought management decisions, such as its investment in Britain's Alliance Trust, the fund is backing the strategy of DMG Mori Seiki Co Ltd, the person said.
It is aiming to benefit from expected gains following the tie-up of the businesses of the two groups. It will, however, carefully monitor the situation and would act to prevent the Japanese group from taking value away from its German investment, the person added. DMG Mori Seiki AG, formerly known as Gildemeister, said on Tuesday its first-quarter net income rose to 19.5 million euros ($21 million), above the 16.4 million euro average estimate in a Reuters poll of analysts. Order intake declined 2 percent to 587.2 million euros as some customers postponed orders.
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