13D MONITOR ACTIVIST MEDIA CENTER
Breaking news and more: Your media center for shareholder activism and corporate governance.
Corvex Management LP has acquired small holdings in U.S. seeds company Monsanto Co. (MON) and German drug and crop chemical group Bayer AG, sources said on Monday. After Bayer raised its takeover bid to more than $64 billion last week, Monsanto is trying to hammer out a confidentiality agreement that would allow extensive due diligence, according to a source. The move suggests that Bayer's latest offer may at least help negotiations progress, though there is no guarantee the latest talks will produce a confidentiality pact or a deal. Bayer last week upped its bid for Monsanto from $122 per share in cash to $125 per share and offered it a $1.5 billion reverse antitrust breakup fee. Monsanto would still need Bayer to raise its offer further in order to agree to a sale, the source said. Corvex, the fund run by former Carl Icahn protégé Keith Meister, would back a sale to Bayer for the right price, sources said. Glenview Capital Management LLC also owns a 2.5% holding in Monsanto, according to regulatory filings, making it the company's seventh-largest shareholder.
Abstract News © Copyright 2016 INFORMATION, INC.
Corporate Heavyweights Back Governance Practices
" Wall Street Journal (07/21/16) Lublin, Joann S."
In an attempt to influence how public companies are run, a coalition is backing a number of corporate-governance practices such as avoiding dual-class shares and replacing ineffective directors. The governance principles, to be disclosed July 21, are supported by the heads of Berkshire Hathaway Inc. (BRKA), General Electric (GE), General Motors (GM), and more. ValueAct Capital Management Ltd., BlackRock Inc., and Vanguard Group are also part of the coalition. The goal is "to drive best governance practices through companies of all sizes," comments Glenn H. Booraem, fund treasurer at Vanguard. Issues such as splitting the roles of chairman and CEO and director term limits were not addressed. The coalition's list of "Commonsense Principles of Corporate Governance," however, does call for a continuing board-refreshment process that includes regular evaluations of board members to ensure their skill sets "remain sufficiently current." The group also recommended that boards consider periodic rotation of committee chairs and the lead independent director. Nelson Peltz, who does not belong to the coalition, nevertheless welcomed the coalition's efforts. "These principles are music to our ears," said Peltz, a founding partner of Trian Fund Management. "Sound corporate governance can lead to better long-term growth and performance at public companies."
Big Funds Push Back Against Activist Investor Settlements
" Reuters (07/18/16) Flaherty, Michael"
Major institutional investors around the globe are spurning activist settlements, arguing that granting board seats to shareholders with short-term agendas could hurt long-term performance. BlackRock Inc. (BLK) and Norges Bank Investment Management, Norway's $872 billion sovereign wealth fund, are among the funds urging companies to consult them before engaging with an activist. A recent example is Barington Capital's campaign for two director positions at U.S. retailer Chico's FAS (CHS). The hedge fund dropped its fight after realizing it could not win enough institutional investor backing for its nominees, sources said. Chico's new CEO, Shelley Broader, reportedly had discussed her strategy with the company's largest shareholders in December; and after Barington arrived, they indicated their support for a fight with the hedge fund. "Some (institutional investors) feel that board seats should not be a bargaining chip, as this practice distorts the board's election process," said Ernst & Young in a summary of its survey of 50 large shareholders in March. Activists still favor settlements over proxy fights, however, and most multibillion-dollar hedge funds can complete deals with companies. But the resistance is putting more pressure on activist hedge fund managers, and their presence on company boards is facing deeper scrutiny.
Icahn, Paulson Add Transparency, AIG President Says
" Reuters (06/15/16) Cohn, Carolyn"
American International Group (AIG) President and CEO Peter Hancock said on Wednesday that Carl Icahn and John Paulson are increasing transparency at the U.S. insurer through their representation on its board. Paulson and Samuel Merksamer, a managing director at Icahn Capital, joined AIG's board last month after Icahn campaigned last year for the company to split itself into three. AIG rebuffed Icahn's proposal in January in favor of its own strategy, which entailed spinning off its mortgage insurance unit and selling its broker-dealer network. “Inclusion of the activists has forced us to be a little bit more transparent,” Hancock conceded at a briefing in London, adding that after seeing the company from the inside, the investors were gaining better understanding of the hurdles to simplifying the company. He said part of that process would include cutting motor insurance business in some of the countries in which it operates, following a decision to pull out of motor insurance in China. Icahn, AIG's fourth-largest investor, has argued that a split would help AIG relieve itself of the regulatory burden of being a "systemically important financial institution," which demands higher capital cushions.
A New Status Quo for the Boardroom
" Wall Street Journal (06/15/16) Garden, Ed"
In an opinion piece, Ed Garden, chief investment officer of Trian Fund Management, says shareholders are growing less passive for a number of reasons. First, institutional shareholders have gotten larger, and their ownership of corporate America has become more concentrated. Second, many of these institutional shareholders have developed deep industry expertise. In addition, poor performance by management and outright abuse of power has created a mindset among shareholders that management teams have lost their right to be left alone. Lastly, there are a few investors—commonly known as “activists” but whom Garden calls “highly engaged shareowners”—who are rousing shareholder support and providing the catalyst for management to be held accountable. Critics have accused activists of pursuing a short-term bump in stock prices, and some politicians claim they lead to short-termism, rising inequality, and low pay for workers. “But in my view,” Garden writes, “the management and directors of public companies, not the shareholders, have driven such short-term behavior, and the way to build strong companies and create jobs is not through government mandate or protecting weak management teams.” Instead, it will occur because market forces will reward the companies in which management teams and highly engaged shareowners work together to achieve sustained, lasting growth, Garden says.
Abstract News © Copyright 2016 INFORMATION, INC.
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In this month’s Activist Report
||Misunderstood activist investors?
Source: CNBC Video - May 19, 2016
||Betting on Zero: Bill Ackman vs. Herbalife
Source: CNBC Video - April 15, 2016
||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
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