Recasts with Elliott Investment Management raising Anglo stake

By Clara Denina, Scott Murdoch and Melanie Burton

LONDON/SYDNEY, April 29 (Reuters) - Anglo American AAL.L faced calls from shareholders on Monday to detail plans for improving its value in order to fend off bidder BHP BHP.AX, as activist investor Elliott further raised the stakes by increasing its holding in the takeover target.

BHP, the world's biggest listed mining group, is privately talking to investors about a potential revised takeover bid as it weighs up next moves after an initial $39 billion gambit for its smaller competitor was rejected by Anglo last week.

Elliott Investment Management meanwhile said in a stock exchange filing on Monday it had raised its position in London-listed Anglo to 2.6% from about 2.5% it disclosed on Friday.

That added to the market heat, with the target company's share price rising 4.05% to 27.50 pounds - well above BHP's opening bid of 25.08 per share.

BHP shares had closed 0.42% lower at A$42.97 ($28.17) in Australia.

"Anglo need to come out and explain to us how they're going to make this business more valuable," said George Cheveley, portfolio manager at Ninety-One.

"You've got the largest mining company (making an) approach, it's a credible approach. You might argue the structure is wrong, and they might be able to change that," he added.

Anglo, which rejected BHP's bid on Friday as opportunistic and significantly undervaluing the miner and its future prospects, will hold its AGM from 1000 GMT on Tuesday in London.

But while shareholders would be keen to hear details of its response, restrictions in the UK Takeover Code mean executives are unlikely to be able to discuss plans beyond a repeat of the rejection, a source familiar with the matter said.

In February, Anglo began a strategic review of its assets in response to a 94% fall in annual profit and a series of writedowns caused by lower commodity demand.

Much of the focus of BHP's bid has been on copper and two of its investors said they saw value in a deal given Anglo's quality assets and long-term price prospects for the metal, which is central to the world's clean energy shift.

The investors, who declined to be named as the talks were private, said they would be open to BHP raising its offer.

"We are receptive to the deal. We potentially would be supportive if BHP raised their offer," said the first investor.

BHP adviser UBS UBSG.S has, in a parallel process, begun scheduling meetings with fund managers for this week, three sources with direct knowledge of the matter said.

These talks highlight the effort that BHP is making to fine-tune a revised proposal for Anglo.

The meetings being sought by UBS will focus on gaining granular details of how BHP shareholders think a second bid should be structured, one of the sources said. That feedback would then be channelled back to BHP, the source added.

BHP and Anglo declined to comment. UBS did not immediately respond to a request for comment.

($1 = 1.5253 Australian dollars)

(Reporting by Clara Denina and Pratima Desai in London, Scott Murdoch and Lewis Jackson in Sydney, Melanie Burton in Melbourne, Yadarisa Shabong in Bengaluru; Writing by Alexander Smith; Editing by Sumeet Chatterjee and Catherine Evans)

((Scott.Murdoch@thomsonreuters.com;))