13D MONITOR ACTIVIST MEDIA CENTER
Breaking news and more: Your media center for shareholder activism and corporate governance.
Engaged Capital LLC is pushing for a sale and other changes at Outerwall Inc. (OUTR) after acquiring a roughly 14% stake in the company, according to a filing Monday. Outerwall, which owns Redbox DVD rentals and Coinstar cash exchange kiosks, has seen its shares plummet over the past year amid apprehension about the waning rentals at its self-service kiosks. The company has reportedly rejected at least three buyout firms over the past two years, according to sources. Engaged, founded by Glenn Welling, is pressing for overhauls including exploring a sale to private equity suitors, and believes the company could pay a higher dividend, slash costs by outsourcing services, and close its ecoATM kiosks that recycle consumer electronics devices and win tax advantages from the losses, according to sources. The activist tends to seek private talks before launching a public campaign, and has successfully instigated the sale of targeted companies including Boulder Brands Inc. and Silicon Image Inc. Outerwall has been targeted by Jana Partners LLC in the past as well, which filed as an activist in October 2013 and urged a sale of the company or its assets, though eventually pulled out after Outerwall initiated share buybacks.
Abstract News © Copyright 2016 INFORMATION, INC.
Sharp Shows Japan Inc. May Be More Open to Foreign Interest
" Reuters (02/05/16) Umekawa, Takashi; Emoto, Emi"
After recent urging from an activist investor to be more transparent about its decision process, Japan’s Sharp Corp. has chosen Taiwan’s Foxconn as its preferred suitor—which would result in the biggest foreign takeover of a Japanese tech company. Last week, Effissimo Capital Management sent the struggling electronics maker a letter asking it to explain how it would decide between two offers. Foxconn, known formally as Hon Hai, won out with a deal worth roughly $5.6 billion. According to sources, people close to Prime Minister Shinzo Abe approved of the idea that a Foxconn deal would help boost foreign direct investment, which is a growing priority in Japan. The country’s efforts to attract foreign investment likely influenced Sharp’s board in picking the foreign offer. "Sharp's decision to choose Hon Hai over a state-backed fund sent a message to foreign investors that it left the decision to the market," said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management. "The move can boost investor confidence ... foreign investors may increasingly feel it's worth investing in the Japanese market."
U.S. Banks Targeted by Activist Investors on Merger Wave Hopes
" Reuters (02/05/16) Flaherty, Michael; Stone, Mike"
Activist investors have tended to avoid banks in the past due to their size, complexity, and amount of regulatory scrutiny they attract; but the sector is growing increasingly attractive as certain factors are expected to drive more mergers. Last year saw 22 activist campaigns aimed at banks, up from just eight in 2009, based on Thomas Reuters Activism data. More recently, Hudson Executive Capital announced it had amassed a $56 million stake in Comerica Bank, a lender with $71 billion in assets under management. Some believe low interest rates, lagging returns on equity, and strict regulations will encourage banks to consolidate and that buyers will be willing to pay a significant multiple to a bank's tangible book value. Betting on banks is not without risk, but the potential profits are tempting—especially as bank deals have picked up just in the last year.
Bank of America's Valuation Is Seen as Invitation for Activists
" Bloomberg (01/29/16) Son, Hugh"
Bank of America Corp. (BAC) has been raised from buy to sell by an analyst, who said in a research note Friday that the company’s low valuation and poor efficiency increase the likelihood of shareholders demanding a spinoff or other restructuring. “With the stock trading at a significant discount to tangible book value, the chance for an event increases -- whether it's a restructuring, spinoff, or some sort of other action to improve their lousy efficiency,” wrote Mike Mayo, analyst at CLSA Ltd. He added that although an activist is an outside shot, increased shareholder pressure is likely. The company is trading below tangible book value which suggests investors either don't believe the firm's assets are worth what it says, or they doubt management's ability to generate returns above the cost of capital, said Mayo. Bank of America's market capitalization is $142.5 billion, which would make it difficult for any hedge fund to take a sizable stake. Regulators also have ultimate control over whether banks can increase dividends and buybacks, which is another factor that makes the company less attractive for activists.
Abstract News © Copyright 2016 INFORMATION, INC.
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This month’s Activist Report:
||No Joy for Hedge Funds in 2015
Source: Bloomberg TV - December 23, 2015
||Does Ackman's Valeant Call Tarnish His Reputation?
Source: Bloomberg TV - October 30, 2015
||Top activist plays for 2015
Source: CNBC Video - January 22, 2015
||Activists gone wild?
Source: CNBC - Squawk Box - November 14, 2014
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