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Primestone Urges Tennant to Merge With Nilfisk
" Reuters (12/13/17) Jacobsen, Stine; Keidan, Maiya"

Primestone Capital is calling on U.S. cleaning equipment company Tennant (TNC) and Danish peer Nilfisk to weigh merging after establishing minority stakes in both firms. "Primestone Capital owns more than 5% of both Tennant and Nilfisk and believes a combination of the two will generate extraordinary returns for shareholders," the London-based firm stated in a filing with the Securities and Exchange Commission. Primestone has a 5.2% stake in Tenant and a 5.6% stake in Nilfisk. Primestone says a merger likely would generate earnings per share accretion of more than 85% for both companies. Some 91 European companies have been engaged by investors this year as of the end of November, according to Activist Insight.

Marcato Likely to Pull off Win in Proxy War With Deckers
" Reuters (12/13/17) Herbst-Bayliss, Svea; Ganesan, Gayathree"

Deckers Outdoor Corp. (DECK) shareholders are expected to award three board seats to Marcato Capital Management at the UGG boots maker's annual meeting Dec. 14, according to a handful of investors who said they will or already have voted for Marcato. Marcato, which has an 8.5% stake in Deckers, is leading in the proxy battle, according to two sources familiar with votes cast by dozens of other shareholders. "There is no argument for not having a shareholder on the board in order to hold management accountable," says Ken Squire of 13D Activist Fund, which owns 0.51% of Deckers' outstanding shares. "I would be surprised if Marcato does not win." All nine Deckers incumbents are up for reelection, but Marcato wants to remove three of them: John Perenchio, John Gibbons, and Karyn Barsa. "The current board has demonstrated that they're not proactive enough in their corporate guidance," says a Deckers investor who is backing Marcato. Marcato has been critical of Deckers' retail strategy and urged management to consider a sale, slash costs, and improve its capital allocation. A sale never materialized, but Deckers pledged to buy back $400 million in shares through 2020, which a number of investors said would help boost the stock price significantly within the next year.

BlackRock Latest Massive Investor to Back London Stock Exchange Chairman Ahead of Shareholder Vote
" City A.M. (12/13/17) Jolly, Jasper"

BlackRock (BLK) is the most recent big investor to support London Stock Exchange (LSE) Chairman Donald Brydon prior to a shareholder vote on his future next week. BlackRock has a stake in the LSE of more than 10%. Shareholders will vote Dec. 19 on a resolution brought by investor Sir Chris Hohn to remove Brydon. Hohn says Brydon arbitrarily let go former CEO Xavier Rolet and presided over a poorly managed succession process. BlackRock's support means shareholders with well over 20% of the shares in the LSE have publicly backed Brydon. The Qatar Investment Authority, Aviva, Glass Lewis, and Institutional Shareholder Services all support Brydon. Pensions and Investment Research Consultants (Pirc) has refused to back Brydon, instead recommending an abstention.

Delaware Court of Chancery Specifically Enforces Oral Settlement Agreement with Investor
" Lexology (12/12/17) Barshay, Scott A.; Deckelbaum, Ariel J.; Fieldston, Ross A."

The Delaware Court of Chancery recently enforced a disputed oral settlement agreement in a proxy fight between Innoviva Inc. (INVA) and Sarissa Capital Management, which led to two dissident directors being installed on the company's board. The court declared that Innoviva and Sarissa had entered into a valid, binding—although oral—agreement that required Sarissa to end its proxy solicitation in exchange for two seats on the Innoviva board. Due in part to what the court called Innoviva's "opportunistic maneuvers" of breaking the agreement only after it became clear that it would win the proxy contest despite early predictions of a loss, the court opted to award Sarissa specific performance of the settlement agreement. The court's decision demonstrates the importance of expressly providing that oral business agreements are contingent upon the parties agreeing on definitive language in a written agreement, especially under circumstances in which the counterparty is likely to take significant irreversible actions in reliance on the oral business agreement.

FrontFour to Push for Sale of Obsidian Energy
" Bloomberg (12/12/17) Deveau, Scott"

FrontFour Capital Group is pressuring Obsidian Energy Ltd. (OBE) to consider a sale of all or part of the company, according to a source. The fund reportedly believes that FrontFour could command about twice as much as its current share price, and that it trades at a steep discount to Canadian peers. FrontFour revealed a roughly 5.6% stake in Obsidian last month and has met with management to discuss ways to maximize value for shareholders. Because of its ownership level in Obsidian, FrontFour can call a special shareholder meeting on its own, and the fund is willing to wage a proxy fight to implement its recommendations, according to the source. The call for a sale comes four years after FrontFour began to amass its position in the struggling oil and gas producer, and also comes after Obsidian Chairman Rick George died in August. Obsidian is now FrontFour's third-largest investment, according to data compiled by Bloomberg. Obsidian's shares have declined 36% this year despite efforts to reduce debt by selling assets. The company—which has a market value of about C$767 million ($595 million)—sold assets in Western Canada last June to Teine Energy Inc. for roughly C$1.1 billion. FrontFour sees Obsidian as having a leading position in the Cardium basin and attractive assets in the Viking basin in Alberta, according to the source.

Canada Pension, Onex Are Said to Lead Element Fleet Bidding
" Bloomberg (12/12/17) Porter, Kiel; Deveau, Scott"

The Canada Pension Plan Investment Board and Onex Corp. have joined to bid for Element Fleet Management Corp., and they are the leading bidder thus far; KKR & Co. also has bid for the commercial vehicle and equipment leasing company, according to sources. A deal to take Element private could be reached as early as this year, the sources said, although a final decision has not been made and other suitors may step up. Marcato Capital Management and Sachem Head Capital Management have urged Element to explore a sale. ValueAct Capital Management is also a shareholder but has not called for a sale.

Neuberger Berman Delivers Letter To Nuance Communications Board Of Directors; Calls For Immediate CEO And Board Changes
" PR Newswire (12/12/17)"

Neuberger Berman and affiliates sent a letter to the board of directors at Nuance Communications, Inc. (NUAN) on Tuesday detailing its concerns about the publicly-announced CEO transition, corporate governance, and shareholder returns. Neuberger Berman—which owns about 1.6% of Nuance's outstanding stock—says that months of private discussions with the company have been fruitless, so it is now opting to make its engagement with the company public. In its letter, Neuberger Berman points to the "unusually longer period of time" taken for the CEO search, after it was announced last year that Chairman and CEO Paul Ricci would retire at the end of March 2018. The letter cited the lack of meaningful updates about this succession, and also noted the "significant shareholder opposition to long-tenured directors at each of the last three annual meetings." Neuberger Berman says these facts suggest that the board defers to Ricci, "who seems to have no intention to relinquish control of the company in March 2018, and may try to continue to exert influence as CEO, Chairman, or in another capacity." Given Nuance's flagging stock price and underperformance compared to peers, Neuberger Berman believes that "Ricci's continued active involvement in any role will be a negative outcome for shareholders" and calls for "an immediate severing" of the company's relationship with Ricci. The letter also urges the board to immediately point Bob Finocchio or Mark Laret, the only two directors who have served for less than 12 years, as Interim Independent Chairman, and for Finocchio to replace Katherine Martin as Chair of the Governance Committee. The letter says Martin should immediately recuse herself from any CEO succession discussion, given her lack of independence, shareholder support, and the fact she has served on the board for 19 years.

Icahn Calls for New Leadership at Xerox
" Reuters (12/12/17) Chatterjee, Laharee"

Carl Icahn on Dec. 12 said in an open letter to Xerox Corp. (XRX) shareholders that he wants to see new leadership at the company, a day after he named four nominees to the company's board of directors. Icahn stated that the company had an "alarming" revenue trajectory and was slow to deploy new products.

Marcato Says Deckers' Rejected Offer to Settle Proxy Contest
" Reuters (12/11/17) Herbst-Bayliss, Svea"

Marcato Capital Management said in a Securities and Exchange Commission filing released Dec. 11 that Deckers Outdoor Corp. (DECK) rejected a proposed settlement that included putting three of the hedge fund's nominees on the board. In a letter to Deckers Chairman John Gibbons, Marcato managing partner Mick McGuire wrote, "Unfortunately Deckers swiftly rejected Marcato's settlement proposal and made clear through its counsel that Deckers was not interested in pursuing any settlement discussions with Marcato." Shareholders will now vote at the company's Dec. 14 annual meeting whether to put the three nominees on the board. Marcato owns an 8.5% stake in Deckers.

LSE Investors Should Abstain at Meet to Oust Chairman-Advisor PIRC
" Reuters (12/12/17) Cohn, Carolyn"

On Dec. 12, the shareholder advisory group PIRC recommended that shareholders of the London Stock Exchange (LSE) abstain in a vote on a resolution proposed by TCI to oust Chairman Donald Brydon. PIRC said it had a "number of concerns" about the board's behavior following the sudden departure of CEO Xavier Rolet and that its handling of the succession strategy constituted a "major failure of board leadership." TCI, which has a 5% stake in LSE, demanded the Dec. 19 meeting to remove Brydon after accusing the board of forcing Rolet out.

Land and Buildings Reiterates Hudson's Bay Real Estate Worth More
" Reuters (12/12/17) Shakir, Taenaz"

On Dec. 12, Land and Buildings again stressed that Hudson's Bay Co.'s real estate assets are worth substantially more than the Canadian department store operator's current market valuation. Jonathan Litt's Land and Buildings, which holds a 5% stake in Hudson's Bay, has called on the company to extract value from its real estate holdings to boost its share price. In a letter to Hudson's Bay shareholders, Litt wrote, "We note that Hudson's Bay world class real estate is valued at C$31 per share...yet it is trading at C$10 per share. HBC's third quarter earnings disappointment...gives us more reason to view and value HBC as a real estate company." He indicated that the company's real estate and capital deals could give it a cash hoard of more than $3 billion, which would help fund a going private transaction.

Qualcomm Merger Calculus Complicated by Investor
" New York Times (12/11/17) de la Merced, Michael J."

Elliott Management wants Qualcomm to raise its bid for NXP Semiconductors (NXPI). On Monday, the hedge fund, which owns about 6% of NXP, argued that NXP was worth $135 a share on its own—far more than the $110 a share that Qualcomm has offered for the company. By extension, Elliott argued that the proposed takeover—valued at $38.5 billion when it was announced—should be re-priced significantly higher. Elliott is hoping to persuade more investors to hold out. Qualcomm has argued that the NXP transaction was all but a done deal, but Elliott's announcement somewhat clouds the matter. Some analysts and investors had wondered whether trouble in the NXP deal could actually help Qualcomm fend off an unwanted advance from Broadcom, which officially went hostile in its pursuit of the company last week by proposing to replace its entire board. However, in a statement on Monday, Qualcomm suggested that it was not interested in using the NXP deal as a defensive measure against the hostile $105 billion takeover attempt by Broadcom, a fellow chip maker.

Marcato Sets Condition for Deckers Interviewing Its Nominees
" Reuters (12/11/17) Ganesan, Gayathree"

On Dec. 11, Marcato said it was open to a proposal from the board of Deckers Outdoor Corp. (DECK) to interview the investor's board nominees only if the company was willing to reach a settlement agreement ahead of its Dec. 14 annual meeting. Marcato, which has an 8.5% stake in Deckers, originally sought to replace the entire nine-member board but has since nominated three members. The hedge fund called the company's Dec. 7 letter seeking to interview its nominees a "record building exercise and an effort to gain a tactical advantage in the proxy contest." Marcato is calling for the company to sell off pieces, buy back shares, and overhaul executive compensation. Its three nominees have received the support of Institutional Shareholder Services, while Deckers' nominees are being backed by Egan Jones and Glass Lewis.

Qatar Backs LSE Chairman in Battle Against Investor
" Financial Times (12/12/17) Stafford, Philip"

The Qatar Investment Authority (QIA) has said it will back London Stock Exchange Group (LSE) Chairman Donald Brydon at an extraordinary shareholder meeting on Dec. 19, where shareholders will vote on the Children's Investment Fund's (TCI's) proposal to remove Brydon from the board. QIA is LSE's second largest shareholder, with a 10.37% stake. A person briefed on QIA's position said, "There wouldn't be a benefit to the LSE Group to change [the] chairman at this time." TCI, which holds a 5% stake, called the meeting over Brydon's handling of the departure of CEO Xavier Rolet at the end of November. ISS and Glass Lewis recently urged shareholders to back Brydon, indicating that TCI failed to present a compelling case for his removal. However, Egerton Capital, which owns a 2.8% stake in LSE, said it would support TCI.

RBR Capital Advisors Eyes Increasing Shift to Shareholder Activism
" Reuters (12/12/17) Hirt, Oliver"

RBR Capital Advisors may begin to focus more on shareholder activism, the Swiss hedge fund operator said Dec. 12. RBR was responding to unnamed sources in a Financial Times article who said that RBR may close two long-short equity funds and redirect investments into the special situations fund that has made a substantial investment in Credit Suisse. "RBR Capital Advisors is currently reviewing its focus with the goal of concentrating in future on shareholder activism. Nothing has been definitely decided," a spokesperson said.

Carl Icahn to Launch New Board Fight With Xerox
" Wall Street Journal (12/11/17) Benoit, David; Prang, Allison"

Carl Icahn plans to engage Xerox Corp. (XRX) to make alterations to company management. Icahn's company has a 9.7% stake in Xerox. "The CEO is the most important person in the company. We believe Xerox still has potential, but it will go the way of Kodak if there aren't major changes," Icahn said. "The times have changed but not the old guard that controls the board." Xerox hasn't commented on Icahn's critique, but said in a statement earlier Dec. 11 that it is "ahead of plan" with respect to its strategic transformation. The way forward for Icahn's engagement was opened when his representative on the board resigned, effectively ending an existing agreement between the company and Icahn. Icahn then named four director nominees in a securities filing. Xerox said Dec. 11 its agreement with Icahn ended as part of Jonathan Christodoro's resignation from the board. Christodoro had been named to Xerox's governance and finance committees, but the agreement prevented Icahn from engaging publicly with the company while he was on the board. Icahn's proposed new slate of directors would include Christodoro and Keith Cozza, both of whom have previously served on boards representing Icahn's positions, according to a securities filing. The other two are Prodigy Pictures Inc. CEO Jaffrey Firestone and Nevada Strategic Credit Investments CEO Randolph Read.

Elliott Says Chipmaker NXP Worth 23% More Than Qualcomm's Offer
" Reuters (12/11/17) Venugopal, Aishwarya"

On Dec. 11, Elliott Management Corp. said NXP Semiconductors NV (NXPI) is worth about 23% more than Qualcomm Inc.'s (QCOM) $38 billion offer to buy the chipmaker. NXP was worth $135 per share on an intrinsic standalone basis, versus Qualcomm's offer of $110 a share in October 2016, according to Elliott, which has a 6% stake in NXP. The hedge fund argues that Qualcomm's offer took advantage of NXP's depressed stock price last year and has acted as a ceiling on its valuation. In a letter to other NXP shareholders, Elliott wrote, "We believe NXP's prospects are bright. Approximately half of NXP's revenue is exposed to exciting growth engines of the semiconductor market—automotive and industrial." However, Qualcomm said the agreed-upon price is full and fair, and that "Elliott's value assertion for NXP is unsupportable and is clearly nothing more than an attempt to advance its own self-serving agenda."

SandRidge Offers Icahn Some Deal Records, Rebuts Claims
" Reuters (12/11/17) McWilliams, Gary"

SandRidge Energy Inc. (SD) sent a letter to shareholders on Monday denouncing Carl Icahn and Fir Tree Partners' campaign against its proposed $746 million acquisition of rival Bonanza Creek Energy Inc. (BCEI). The firm declared the dissidents' claims that the deal would damage shareholder value were "false and reckless," and a purchase would boost cash flow per share by 15% next year and provide operational and financial synergies. SandRidge also said it anticipates more than $300 million in liquidity at the deal's closing through a planned $700 million credit facility. Icahn, who owns a roughly 13.5% stake in the company, has dubbed the offer "value-destroying" and said it provides "no obvious synergies nor economies of scale." The investor said in an open letter to SandRidge's board released Dec. 1 that he may seek to overhaul the company's board of directors. Fir Tree, which owns about 8.3% of SandRidge shares, has described the bid as providing an "unjustified premium." In early trading on Monday, Bonanza Creek shares were up 2.5% at $27.50, well below SandRidge's Nov. 15 offer of $36 a share in cash and stock. SandRidge on Dec. 8 also agreed to make some internal documents regarding the proposed acquisition available to Icahn subject to reaching a confidentiality agreement. The company said that Icahn's attempts to discuss his opposition with others or to remove board members would not automatically trigger the company's poison pill plan.

Top LSE Investor Aviva to Vote Against TCI at Shareholder Meet
" Reuters (12/08/17) Jessop, Simon"

Aviva Investors, a top investor in the London Stock Exchange (LSE), announced it would reject a resolution proposed by hedge fund TCI to oust Chairman Donald Brydon at the shareholder meeting on Dec. 19. Trevor Green, head of U.K. equities at Aviva Investors, said he would vote for Brydon to stay, having had a "long-running and constructive relationship" with him during his tenure at the LSE and previously at software company Sage. "The role of chief executive at the LSE is a prestigious position, and I feel confident that the nominations committee will appoint a suitably impressive individual to carry on the work that Xavier Rolet did at the company to get it where it is today," he said. Aviva Investors is the LSE's 16th-largest shareholder.

Outback Co-Founder Parts Ways With the Company After More Than a Quarter Century
" Tampa Bay Business Journal (12/11/17) Manning, Margie"

Outback Steakhouse co-founder Chris Sullivan has resigned from the board of directors of parent company Bloomin' Brands Inc. (BLMN) to focus on other opportunities. Bloomin' Brands disclosed his Dec. 6 resignation in a filing with the Securities and Exchange Commission, indicating that it reduced the size of its board to seven members. Sullivan's resignation follows a disclosure last month by Jana Partners LLC that it has acquired an 8.7% stake of Bloomin' Brands stock and plans to discuss strategic alternatives, including a potential sale. Sullivan remains a major shareholder in Bloomin' Brands, controlling 1.2 million shares of Bloomin' stock, or 1.17% of the total stock outstanding, as of the March 2 proxy statement.

Icahn Nominates Four Directors to Xerox's Board
" Reuters (12/11/17) Panchadar, Arjun; Chatterjee, Laharee"

Xerox Corp. (XRX) announced Monday that Carl Icahn has nominated four individuals to the board of directors. The move comes after a current Icahn-appointed director stepped down due to a difference of opinion with the board, ending a standstill arrangement between the company and the Icahn Group made in June 2016 and enabling Icahn to make his nominations, Xerox said. Jonathan Christodoro, a former managing director of Icahn Capital LP and a Xerox board member since June last year, informed Xerox's chairman in a letter that he was one of the four Icahn nominations. "Until the last few weeks, it appeared that the Board's decisions would be consistent with my views on the best interests of Xerox and our shareholders," Christodoro wrote in a Dec. 8 letter to Chairman Robert Keegan. "It now appears, however, that the Board will make decisions and take Xerox in a direction with which I strongly disagree." Christodoro did not offer further details on these decisions. In a statement, Xerox reiterated its full-year forecasts for adjusted operating margin, earnings per share, cash flow, and revenue and pointed out that its stock has risen almost 30% this year, outperforming the S&P 500. Icahn Associates Corp. is Xerox's top shareholder with a 9.7% stake as of September.

SandRidge to Make Some Internal Records Available for Icahn
" Reuters (12/11/17) Benny, John"

SandRidge Energy Inc. (SD) announced Monday it has agreed to Carl Icahn's request to release certain internal documents on its proposed acquisition of rival Bonanza Creek Energy Inc. (BCEI). The billionaire investor, who has called the $746 million deal "value-destroying," called for the documents last week in order to examine deliberations involving the deal and other issues including executive pay at SandRidge. The oil and gas producer did not reveal on Monday what company records it would make available to the investor. Icahn is SandRidge's biggest shareholder with a 13.5% stake. Other major shareholders in SandRidge including Fir Tree Partners and Susquehanna Advisors have also opposed the deal.

Reuters: Hong Kong Fund Tells Toshiba That Chip Unit Sale to Bain Group Not Necessary
" Reuters (12/11/17) Fuse, Taro; Yamazaki, Makiko"

Argyle Street Management Ltd. sent a letter to Toshiba Corp.'s board on Monday declaring the $18 billion sale of its chip unit to a Bain Capital-led group is no longer necessary after its recent capital injection. The Hong Kong-based hedge fund is inviting the more than 30 foreign investors who participated in Toshiba's 600 billion yen ($5.3 billion) new share issue to partner up, and is already in talks with at least three funds who agree. While the potential for funds to derail the deal will depend on how many join in opposition, Argyle's letter highlights the anxiety about Toshiba's recruitment of activist shareholders in its new share issue. Toshiba agreed in September to sell chip producer Toshiba Memory to the Bain consortium to cover billions of dollars in liabilities stemming from its embattled U.S. nuclear power unit Westinghouse. To ensure it remains listed, Toshiba also secured the $5.3 billion cash injection from overseas funds, which gives it enough funds to cover its liabilities. Argyle believes "there no longer is any urgency to undertake a sale of Toshiba Memory," it said in the letter seen by Reuters, and proposed a meeting with Toshiba's board in December or January. The deal "significantly undervalues the business," the letter said, adding that the board should instead weigh an IPO for Toshiba Memory. The new share issue included some big-name shareholders including Third Point LLC and Oasis Management Company. Argyle also said it thought Toshiba's U.S. nuclear unit Westinghouse still had value and it was confused as to why Toshiba had assigned zero value to its claims against Westinghouse.

LSE Moves Quickly in Search for New Chief Executive
" Financial Times (12/10/17) Stafford, Philip"

The London Stock Exchange Group (LSE) is seeking a new CEO, a sign the board believes it will prevail against The Children's Investment Fund's (TCI's) efforts to oust Chairman Donald Brydon. TCI has a 5% stake in the LSE. The LSE is seeking a CEO who will refine instead of revamp the strategy established by Xavier Rolet, who stepped down in November amid a governance crisis, according to sources. Interim chief David Warren is not seeking the top role, sources say. The board is working to return stability to the exchange ahead of an extraordinary shareholder meeting on Dec. 19, when investors will vote on whether to remove Brydon. The meeting was called by TCI, which has criticized Brydon's handling of Rolet's departure. Last week both ISS and Glass Lewis recommended that shareholders back Brydon, arguing that TCI failed to present a compelling case for his removal.

City's Big Guns Will Back LSE Chairman in Leadership Battle
" Telegraph.co.uk (12/09/17) Marlow, Ben"

A number of major institutional investors say they plan to back the London Stock Exchange's chairman at an extraordinary general meeting this week, dealing another blow to The Children's Investment Fund Management (TCI). Investors expressed worries that removing Donald Brydon would be destabilizing to one of the U.K.'s most important financial institutions. One top investor said: "It's hard to boot a chairman at the best of times but losing him when you've just lost your chief executive makes you look accident prone. It's not great." TCI called for Brydon's removal when CEO Xavier Rolet announced he would step down at the end of 2018, a year earlier than expected, at the request of the LSE board. Instead, Rolet was forced out immediately as result of TCI's campaign. The hedge fund's efforts took another hit when two influential shareholder advisory groups announced their support for the chairman. Another leading shareholder said: "The board is in place to run the company and it was unanimous in the succession plan. It was a collective decision and we will support them." TCI recently accused Brydon and the board of presiding over the dismissal of "a world-class CEO without providing any good reasons." One shareholder commented that TCI had "overplayed their hand dramatically."

KKR's Tender Offer for Hitachi Kokusai Succeeds by Slight Margin
" Reuters (12/08/17) Fujita, Junko"

U.S. buyout fund KKR & Co. LP (KKR)—under pressure from Elliott Management to boost its offer price—scraped a successful tender offer for the Japanese semiconductor equipment maker Hitachi Kokusai Electric Inc. KKR had sought at least about 24% of Hitachi Kokusai at 3,132 yen each in a tender offer that closed on Friday, and won 24.9%, company statements revealed on Saturday. Parent Hitachi Ltd. agreed to sell its stake of just over 50% back to Hitachi Kokusai at 1,870 yen per share as part of the $2.2 billion deal. KKR had sweetened its offer price twice to mollify Elliott, known for buying stakes in firms in the middle of takeovers. The first increase came after Elliott disclosed a stake in Hitachi Kokusai in September, and the final price was 25% higher than the initial offer of 2,503 yen. Elliott has since increased its holding to 8.59%. KKR said 26,242,364 shares were tendered, compared to the minimum 24,815,889 it was seeking. The tendered shares equal 25.5% of Hitachi Kokusai when excluding treasury shares.

NYSE Proposes Changes Regarding Delivery of Proxy Materials; SEC Approves NYSE Restriction on Timing of Issuance of Material News After Close
" Cooley PubCo (12/07/17) Posner, Cydney"

The New York Stock Exchange (NYSE) has proposed to modify its requirements for delivering hard copies of proxy materials. Currently, listed companies are required to provide hard copies of proxy materials to the NYSE under Section 204.00(B) and Section 402.01 of the NYSE Manual. The NYSE wants to amend Section 402.01 so that listed companies would not be required to provide hard copies of proxy materials, as long as they were included in a Securities and Exchange Commission (SEC) filing available on EDGAR. Meanwhile, the SEC has approved, on an accelerated basis, the NYSE's proposed amendment to Section 202.06 of the NYSE Manual restricting the timeframe when companies can issue material news after the official closing time for the NYSE's trading session. The amendment will prohibit listed companies from issuing material news after the NYSE's official closing time until the earlier of publication of the company's official closing price on the NYSE or five minutes after the official closing time, except when publicly disclosing material information following a non-intentional disclosure to comply with Regulation Fair Disclosure. The SEC concurred with the NYSE's contention that "the maximum five minute delay mandated by the proposal is consistent with investor protection in that it will reduce the likelihood of investor confusion that could result if material news is issued prior to the completion of the Exchange's closing auction but while trading is continuing on away markets."

BlackRock Urges More Than 100 Firms to Report Climate Dangers
" Business Day (New Zealand) (12/08/17) Chasan, Emily"

BlackRock (BLK) has sent letters from its corporate governance team to about 120 companies to urge them to report climate dangers in line with recommendations from the Financial Stability Board's task force on climate-related financial disclosures. The task force was established by Bank of England Gov. Mark Carney. The letters, signed by BlackRock global head of investment stewardship Michelle Edkins, were sent to the firm's holdings worldwide with "material climate risk inherent in their business operations," such as those in the energy, transportation, and industrial sectors. The move comes after BlackRock cast votes this year in favor of shareholder proposals at such companies as Occidental Petroleum (OXY) and Exxon Mobil (XOM) to get them to provide more detail on the issue.

Elliott Management Is Said Push for Changes at Alexion
" New York Times (12/07/17) de la Merced, Michael J."

Despite remaking its executive ranks over the past year after numerous problems under previous management came to life, Alexion Pharmaceuticals (ALXN) is being engaged by Elliott Management, which, according to sources, believes the biopharmaceutical company could do more to lift its stock price. The sources say Elliott could launch a proxy fight to claim seats on Alexion's board, among other things, if management does not take action. Elliott reportedly began investing in the company in April, and while the hedge fund has expressed support for Alexion's overall strategy, the sources say it also is calling for the new management team to further reduce costs, impose higher financial performance targets, and improve communications with investors and analysts. Furthermore, Elliott has argued that more changes to the board are necessary, including the addition of more biotech experts as directors, and it has cautioned against ambitious acquisitions outside of the company's core expertise.

Bloomin' Brands Signs a Billion-dollar Debt Deal
" Tampa Bay Business Journal (12/07/17) Manning, Margie"

Bloomin' Brands Inc. (BLMN) has entered into a deal with a group of lenders led by Wells Fargo Bank and now has access to up to $1.5 billion in credit, according to a Dec. 5 filing with the Securities and Exchange Commission (SEC). The deal was reached soon after Jana Partners LLC revealed it intends to discuss with the company strategic alternatives, including a possible sale. Bloomin' looks forward to meeting with Jana, a Bloomin' spokesperson said in November. Bloomin' has retained Watchell Lipton to assist with Jana's engagement. Bloomin' had nearly $1.2 billion in outstanding debt, which it paid off with proceeds from the new credit deal, according to the SEC filing. Two credit rating agencies have analyzed the new debt deal. Moody's Investors Service granted the deal and Bloomin' Brands ratings near the top of the non-investment grade speculative rating scale and a stable outlook, while S&P assigned a BBB- rating—an investment grade rating at the low end of the scale.

Dover to Spin Off Upstream Energy Businesses After Loeb Push
" Reuters (12/07/17) Ajmera, Ankit"

On Dec. 7, Dover Corp. (DOV) said it plans to spin off its upstream energy businesses, Wellsite, into a new publicly traded company. The move comes almost two months after Third Point's Daniel Loeb called on the industrial equipment maker to separate its energy business. Third Point owned 1.06% of Dover's outstanding shares as of Sept. 30 and indicated last month that the company's shares underperformed the industrial peer group due to a major earnings decline in its energy business. The spin off will enable Dover to focus on growing its other three businesses: engineered systems, fluid management, and refrigeration and food equipment.

Germany's Uniper Flags Higher Dividends to Fend off Fortum Bid
" Reuters (12/07/17) Steitz, Christoph; Käckenhoff, Tom"

German energy firm Uniper is urging shareholders not to tender their stock to Fortum in the Finnish group's 8.05 billion euro ($9.49 billion) takeover bid, pledging Thursday higher dividends in the future.  Uniper's management argues the deal undervalues the company and lacks strategic sense given Uniper's large exposure to gas- and coal-fired power plants compared with Fortum's focus on clean technologies.  Uniper said it would pay a total dividend of roughly 310 million euros for 2018, up 24% from this year, adding payouts would increase by a quarter on average through 2020.  Uniper shares were trading around 25 euros per share on Thursday, above the 22 euros Fortum is offering and up more than twice since it was spun off from former parent E.ON and listed in September 2016.  Under Fortum's takeover offer, E.ON can sell its remaining 46.65% stake in Uniper by Jan. 11, 2018, which is considered likely given a large fee it would have to pay if it fails to do so.  All other shareholders can tender their shares by Jan. 16.  Fortum on Thursday confirmed it would not raise its bid even after Elliott Management, known for buying into pending M&A deals to extract higher offers, acquired a stake in Uniper this week.  The group emphasized it was largely focused on E.ON's Uniper stake, but would accept all shares.

Proxy Firm ISS Advises Shareholders to Back Marcato at Deckers
" Reuters (12/06/17) Herbst-Bayliss, Svea"

Institutional Shareholder Services (ISS) changed its position Wednesday to recommend shareholders of Deckers Outdoor Corp. (DECK) vote for Marcato Capital Management's slate of directors at the Dec. 14 annual meeting.  The proxy advisory firm had signaled its support for Marcato last week but hesitated to fully endorse the dissident's campaign, considering its bid to replace all nine members of the board too harsh.  After Marcato slimmed down its proposed slate on Monday to just three independent directors, the proxy advisor changed its tune, throwing its support fully behind Marcato.  ISS declared Wednesday that the Deckers board has been sluggish in addressing problems at the company and that it was time for a shake-up.  "Shareholders are therefore advised to directly support dissident nominees Fuller, Waterman, and Feldman by voting FOR their election on the dissident (GOLD) card," ISS wrote.  Steve Fuller was previously marketing chief of L.L. Bean, Anne Waterman is a former Michael Kors (KORS) executive, and Kirsten Feldman is a former Morgan Stanley (MS) executive.  The new ISS report commended the nominees' retail expertise.  Meanwhile, proxy advisory firm Egan-Jones recommended Wednesday that shareholders vote for all of Deckers' incumbent directors, while Glass Lewis backed the company's directors last week.  Marcato, which owns an 8.5% stake in Deckers, has already won one proxy contest at Buffalo Wild Wings (BWLD) this year and posted some of the hedge fund industry's strongest returns.  Its flagship fund up was 24% through November.

Billionaire Hedge Fund Manager David Einhorn Overwhelmingly Loses GM Shareholder Vote
" Forbes (06/06/17) Vardi, Nathan"

On June 6, shareholders of General Motors (GM) voted overwhelmingly against hedge fund billionaire David Einhorn's push for a dual-class common stock structure, with 91% of the votes cast against the proposal. The shares cast by Einhorn's Greenlight Capital were just about the only votes in favor of the proposal, as 96% of non-Greenlight votes cast rejected it. Einhorn's efforts to get three directors on GM's board also were unsuccessful, with shareholders electing all 11 of GM's board nominees, who received between 84% and 99% of the votes cast. "We are disappointed that shareholders have elected to maintain the status quo," Einhorn said in a statement. "We congratulate GM's management on their win today."

Billionaire Hedge Fund Manager David Einhorn Overwhelmingly Loses GM Shareholder Vote
"Associated Press (06/06/17) Gordon, Marcy"

On June 6, shareholders of General Motors (GM) voted overwhelmingly against hedge fund billionaire David Einhorn's push for a dual-class common stock structure, with 91% of the votes cast against the proposal. The shares cast by Einhorn's Greenlight Capital were just about the only votes in favor of the proposal, as 96% of non-Greenlight votes cast rejected it. Einhorn's efforts to get three directors on GM's board also were unsuccessful, with shareholders electing all 11 of GM's board nominees, who received between 84% and 99% of the votes cast. "We are disappointed that shareholders have elected to maintain the status quo," Einhorn said in a statement. "We congratulate GM's management on their win today."

RELEVANT ARTICLES

Fenwick Releases 2017 Trends in Corporate Governance, Comparing Silicon Valley 150 and S&P 100
" Marketwired (12/13/17)"

Fenwick & West has released its Corporate Governance Survey for the 2017 proxy season, providing insight into the management, leadership, and governance of technology and life sciences companies in Silicon Valley. The survey covers more than a decade of governance trends, comparing companies in the S&P 100 and their smaller and younger counterparts in the Silicon Valley 150 (SV 150), highlighting similarities and differences over time. The latest survey shows that longtime trends in the S&P 100 and SV 150 continued in the 2017 proxy season with a few exceptions, notably in the areas of dual-class stock structures and classified boards, where SV 150 companies are going their own way, in many cases to maximize protections against the vagaries of short-term market pressures—but also in board leadership where separation of chair and CEO roles is substantially more common. Adoption of dual-class voting stock structures has emerged as a recent clear trend among Silicon Valley technology companies-among the mid-to-larger SV 150 companies—though it is still a small percentage of companies. Historically, dual-class voting stock structures have been significantly more common among S&P 100 companies than among SV 150 companies, though the frequency in the SV 150 (11.3% in 2016 to 10.9% in 2017) has surpassed the S&P 100 (9.0% in both 2016 and 2017) in recent years. Classified boards are now significantly more common among SV 150 companies than among S&P 100 companies. Compared to the prior year, classified boards remained fairly consistent, holding steady at 6.7% for the top 15 companies in the SV 150 while the S&P 100 has been at 4.0% since 2016. The rate of implementation of some form of majority voting has risen substantially over the period of this survey. The increase has been particularly dramatic among S&P 100 companies, rising from 10% to 97% between the 2004 and 2017 proxy seasons. Among SV 150 companies, the rate has risen from zero in the 2005 proxy season to 59.9% in the 2017 proxy season. The prevalence of stock ownership guidelines has generally increased over time in both groups, but the SV 150 only recently surpassed the level of the S&P 100. 2017 continued the long-term trend in the SV 150 of increasing numbers of women directors and declining numbers of boards without women members. The rate of increase in women directors for SV 150 overall continues to be higher than among S&P 100 companies . When measured as a percentage of the total number of directors, the top 15 of the SV 150 now slightly exceed their S&P 100 peers (the top 15 averaged 25.4% women directors in the 2017 proxy season, compared to 23.9% in the S&P 100).

Want More Women on Boards? This Stat Helps
" Bloomberg (12/11/17) Tan, Gillian"

A global effort to shore up the number of women on corporate boards may be taking longer than it should, but the recent performance of companies that lead their peers in this area may accelerate change. A recently published MSCI study shows only seven companies in its key global index, which comprises over 2,500 members, have boards that are dominated by females. Of these seven, four have outperformed their industry peers. The list is led by Gucci owner Kering FP, which has seven women on its 11-member board and has outperformed the entire index as well as the more-specific consumer discretionary index on a year-to-date measure. Certain sectors have a greater proportion of companies with three or more women on their boards, leaving the laggards, such as IT and energy, to play catch-up.

As the Investor Stewardship Group Framework Goes Into Effect, Investors Want Companies to Explain Their Governance Practices
" Davis Polk’s Corporate Governance Briefings (12/07/17) Chiu, Ning"

The Investor Stewardship Group's (ISG) Framework for U.S. Stewardship and Governance takes effect on Jan. 1, 2018. Beginning with the 2018 proxy season, ISG is "encouraging" companies to explain "how their governance structures and practices align with the ISG's Corporate Governance Principles and where and why they differ in approach," according to a press release from ISG. Companies are free to choose how and where to disclose their alignment with the principles, such as through investor relations, boards, corporate governance websites, or shareholder engagement materials. The majority of the principles establish fairly broad guidelines, such as emphasizing that boards are accountable to shareholders and that directors' experience and skills should be relevant to corporate strategy, but others promote specific structures, such as annual elections for directors, proxy access rights, one-share one-vote standards, and board responsiveness to shareholder proposals that receive majority votes. The principles advocate independent leadership, a majority of independent directors, and independent committees. ISG's goal is to establish the first broad-based U.S. stewardship and governance code. The framework is not intended to be all-inclusive or comprehensive in nature, and is not a substitute for direct engagement.

U.K. Corporate Governance Code Changes to Hit Chairpersons
" Financial Times (12/11/17) Marriage, Madison"

The chairpersons of more than 60 of Britain's biggest listed companies risk running into trouble with respect to proposed corporate governance reforms that aim to put an end to stale and insular boardrooms. The recently proposed rules state for the first time that chairs should step down from their role after nine years on the board. The change would affect the chairs of 67 listed companies, of which 19 are in the FTSE 100 index. This includes John McAdam, who heads both Rentokil Initial and United Utilities; and Alison Carnwath of commercial property developer Land Securities. Both have spent more than nine years in their current role, something that is disapproved of by shareholders but had not previously been formally discouraged by the Financial Reporting Council, the watchdog that oversees the code.

More Companies Find Spending on Corporate Responsibility Increases the Bottom Line
" Chicago Tribune (12/08/17) Trotter, Greg"

More companies are ramping up their corporate social responsibility (CSR) efforts because both the public and investors are demanding it. These companies are discovering that such efforts can not only improve marketing and sales, but also bolster the supply chain and help attract and retain talented employees.  Recently, for instance, Kraft Heinz (KHC) issued its first CSR plan. The 70-page document outlined various aspirations, such as using only eggs from cage-free hens in all global operations by 2025 and using only sustainably sourced palm oil.  In 2016, what's known as sustainable, responsible, and impact investing in the United States tallied $8.72 trillion, up 33% from 2014, according to the US SIF Foundation: The Forum for Sustainable and Responsible Investment. So, approximately $1 out of every $5 in professionally managed assets in the United States considers environmental, social, and governance factors.

Investor Howard Shore Says United Kingdom Has a Right to Know Details of Rolet Exit
" Financial News (12/08/17) Kinder, Tabby"

Investor Howard Shore, the founder of U.K. stockbroker Shore Capital, is expressing his views on the battle between Sir Christopher Hohn's TCI Fund Management and the board of the London Stock Exchange (LSE), arguing the U.K. public has a right to know the circumstances behind CEO Xavier Rolet's exit. Shore says all members of the "London financial community" are stakeholders in the success of the LSE because it is a "critical business institution." "I think it is preposterous to suggest that [Rolet] ran the exchange so well but that he wasn't a nice person so let's get rid of him," Shore says. "This is madness, I think we would all like to know the answer, we're all stakeholders." Shore wants LSE board members to be more transparent about whether they had a reason to oust Rolet. "[Rolet] ran the LSE exceptionally well, and we're entitled to know why the management apparently encouraged him to go," he says. Rolet's eight-and-a-half year stint at the LSE coincided with substantial growth of capitalization from £800 million to about £13 billion, but he encountered significant challenges when a deal to merge with Deutsche Börse fell apart in March.

Index Managers Becoming More Proactive in Corporate Governance
" Pensions & Investments (12/07/17) Baker, Sophie"

Index and exchange-traded fund (ETF) providers are working on corporate governance and making positive headway, but more work is needed to boost disclosure and communication, according to Morningstar. The firm's latest research report, titled "Passive Fund Providers Take an Active Approach to Investment Stewardship," surveyed index strategy and ETF providers throughout the United States, Europe, and Asia. Collectively, the firms have over $20 trillion in assets now under management. Morningstar's report highlighted a half-dozen key findings on the stewardship activities of the money managers. "The shift to index investing hasn't led to an abdication of stewardship responsibilities," read the report. On the contrary, Morningstar found that such index managers as BlackRock (BLK), State Street Global Advisors (STT), and Vanguard Group "are increasingly taking an active role in the oversight of investee companies."

Corporate Boards' Zombie Problem Proves Persistent but Curable
" Bloomberg Law (12/07/17) Vittorio, Andrea"

Bloomberg Law columnist Andrea Vittorio writes that "so-called zombie directors are hard to eliminate." Public company directors become "zombies" when they get elected without support from at least 50% of voting investors. Even though the number of directors losing the vote has fallen in the past two years, the portion that sit on the board as zombies instead of stepping down has remained pretty much the same, a recent Proxy Insight analysis of U.S.-listed companies shows. For years, the Council of Institutional Investors has pressured companies with zombie directors to adopt standards requiring board members to receive a majority of votes to be elected. "Directors are now held to a majority-vote standard at nine in 10 companies in the S&P 500 index, but only about three in every 10 Russell 2000 companies," Vittorio notes.

Inside Elliott Management: How Paul Singer's Hedge Fund Always Wins
" Fortune (12/07/17) Wieczner, Jen"

In the world of shareholder activism, Elliott Management has emerged as both the largest and most active of activist hedge funds, and one that almost always seems to get its way. In the past five years, Elliott has launched activist campaigns at more than 50 companies—19 this year alone—in at least a dozen countries. During that span, Elliott's battle with Samsung is the only one that went all the way to a vote, and the only one in which the firm didn't get what it wanted—a sign of just how effective it is at pressuring management to agree to its demands. At the same time, Elliott's assets have nearly doubled to roughly $39 billion, making it more than twice the size of the second-biggest activist hedge fund, Dan Loeb's Third Point. That war chest, along with Elliott's 400-­person staff, has rendered the firm virtually impossible for adversaries—from industry titans to nation states—to beat in a fight. Interviews with more than 40 people who have dealt with the hedge fund—including bankers, advisers, board members of various companies, and current and former employees of the firm—yield previously unreported details that reveal just how far Elliott will go to win. Dirt-digging and other aggressive tactics, while controversial, shed light on just what distinguishes Elliott from its less successful peers. Some investors worry that Elliott may undermine the ability of other activists to work with companies in good faith, whether by its indifference to the human toll of its campaigns or because of its apparent affinity for knocking companies out of existence. "Elliott is single-handedly making the public markets less attractive to companies," Jeff Ubben, CEO of hedge fund ValueAct, says, "and we see it in the shrinking number of public companies and the growth in private ownership."

Tech Giants, Chinese Buyers, and Activist Investors Are the New Drivers of Mergers and Acquisitions, Business Heads Claim
" City A.M. (12/07/17) White, Lucy"

Shareholder activism will be one of the top factors influencing deals next year, along with protectionism, new tech giants, and interest from China, according to new research from law firm Herbert Smith Freehills (HSF). Senior executives and advisers surveyed from Europe, Asia, and the United States have said that political intervention in cross-border mergers and acquisitions (M&A) is on the rise globally, often amid protectionist rhetoric. Activist investors will also be a major factor driving M&A, the survey found. A whopping 69% of respondents, consistent across all regions, said such shareholders would have an impact, as activism has spread from the United States to Europe and even into Asia Pacific. Elliott spent much of this year pressuring AkzoNobel to agree to a merger with PPG Industries (PPG), for example. Meanwhile, half of business leaders thought that "new technology giants" would produce the most significant deals in 2018. Chinese buyers seem to be the ones to watch, although they are regarded with significant caution from sellers. In addition, to help the United Kingdom survive after Brexit, the country "needs to reaffirm its traditional openness to international investors," said HSF partner Caroline Rae.

We Won't Stand for It! Why Gender Will Be in Focus During Proxy Season
" Barron's (12/06/17) Norton, Leslie P."

Investors are looking closely at publicly traded companies for risk as a result of the recent wave of sexual-harassment allegations. As the season to file shareholder resolutions approaches, expect to see more proposals to boost gender and pay parity among companies as a way of addressing sexual harassment. Institutional Shareholder Services, the proxy advisor, has seen a growing number of institutional-investor clients inquire about data on sexual harassment for use in their holistic due-diligence analysis of portfolio company risks this year. Walden Asset Management, the socially responsible investing arm of Boston Trust & Investment Management, has approached seven well-known financial institutions with potential proposals directing that they disclose publicly gender, pay, and other data that they currently share confidentially with the U.S. Equal Employment Opportunity Commission (EEOC). According to Director Search, the boards of U.S. public companies are typically 12% female; on S&P 500 boards, the average is 21%. There were 85,000-plus sexual-harassment charges filed with the EEOC between 2005 and 2015. According to a study of the data by the Center for American Progress, 14.2% were in accommodation and food services, 13.4% were in retail, 11.7% were in manufacturing, and 11.5% were in health care. "The point is that once we see where the problems have been, we can begin to understand and incorporate higher risk for those issues," says one institutional investor, who asked not to be named.

India: The Rise and Rise of Shareholder Activism
" Lexology (12/05/17) Shah, Anuj; Vasan, Praneetha"

India is seeing a rise in shareholder activism, which is in line with the considerable increase in activism worldwide in recent years. An early instance of activism in India was the rejection of an increase in remuneration of certain key executives of Tata Motors by shareholders in July 2014, and more recently, in June 2017, shareholders of Raymond rejected the sale of JK House at an allegedly below market price to the promoters of Raymond. Those triumphs for investors have encouraged others to take an active part in the management of companies. In a few notable instances, certain shareholders took an active interest in management but failed to obtain a majority vote of the shareholders. The Companies Act 2013 provides for several rights and remedies to minority shareholders, and some of the more commonly used ones involve board involvement, class action, and shareholder approval. Another law that backs shareholders is the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A SEBI-appointed committee recently submitted a report on corporate governance in India which, inter alia, recommends penalties for auditors in case of lapses, immunity to whistleblowers, stricter regulations for independent directors, webcasting of shareholder meetings and introduction of a stewardship code to monitor the engagement of the institutional investors with their investee companies. Once implemented, the recommendations will act as a catalyst in increasing the wave of investor activism in India.


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