BHP Willing to Talk About Elliott's Overhaul Plan
" Wall Street Journal (02/20/18) Hoyle, Rhiannon"
BHP Billiton Ltd. (BBL) Chief Executive Andrew Mackenzie said Tuesday he will meet with Elliott Management Corp. later this week—and other investors over the next few weeks—to discuss their issues with the miner's Sydney-London dual listing. Elliott, which owns roughly 5% of BHP's London stock, earlier this month renewed its attack on BHP's corporate structure. A Feb. 5 report it commissioned by FTI Consulting said shareholders would gain more than $22 billion if BHP scrapped its dual listing and became a single Australia-incorporated company. BHP said it views the costs and risks as outweighing the potential benefits, and reiterated its defense of its structure on Tuesday. However, Mackenzie said he will discuss it over the next few weeks with investors. "I acknowledge there are some ways in which you can do the numbers where the upside prize looks quite large," Mackenzie said, but other scenarios "suggest this is a very risky venture indeed." BHP on Tuesday also offered a clearer timetable for offloading its U.S. shale business—a disposal applauded by Elliott when it was announced last August. The company said it anticipates initial bids between March and June and could announce deals before the end of the calendar year. "Over a 12-month time frame, we'd like to see them sell that onshore business and return cash to shareholders through an uplift in the dividend and an off-market buyback in Australia," said Craig Evans, who co-manages a natural-resources fund for Tribeca Investment Partners, a BHP shareholder.
Qualcomm Raises Bid for NXP to $44 Billion
" Wall Street Journal (02/20/18) Dummett, Ben"
Qualcomm Inc. (QCOM) on Tuesday sweetened its bid for NXP Semiconductors (NXPI) to roughly $44 billion, following pressure from Elliott Management Corp. The move could help the chip giant as it seeks to fend off a $121 billion takeover approach from Broadcom Ltd. (AVGO), which has threatened to withdraw its offer if Qualcomm makes a higher offer for NXP. Qualcomm upped its bid for rival chip maker NXP to $127.50 a share, up from its initial offer of $110. The move is meant to satisfy shareholders who had argued the original bid was too low. Elliott—which owns a 7.2% stake—had been one of the key advocates for a higher price, arguing that NXP was worth at least $135 a share. It cited NXP's better-than-expected fourth-quarter earnings among other factors. Elliott said Tuesday it had agreed to tender its shares in NXP in response to the higher offer. Under the initial deal terms, Qualcomm requires support from NXP shareholders holding at least 80% of the company's shares. The updated offer lowers the minimum tender condition to 70% of shares outstanding. That threshold gave NXP shareholders considerable leverage to block the deal, putting pressure on Qualcomm to up its bid. Qualcomm is expected to receive significant support for the revised offer, helping to ensure it can complete the acquisition, according to sources. In addition to shareholder support, Qualcomm is still seeking approval from Chinese antitrust authorities.
BHP Rebuffs Elliott as First-Half Profit Hits Three-Year High
" Bloomberg (02/20/18) Stringer, David"
BHP Billiton Ltd. (BBL) joined competitors in boosting shareholder returns as first-half profit rose to a three-year high. The miner increased interim dividend payments 38% to beat estimates as underlying earnings rose by 25% to $4.1 billion, according to a Tuesday statement. Higher commodity prices lifted the results, CEO Andrew Mackenzie said. "We used this cash to further reduce net debt and increase returns to shareholders through higher dividends," he said. China's growth is expected to slow slightly through 2018, as strength in infrastructure is offset by weaker expansion in housing and automobile markets, BHP said. The company also spurned a renewed request from Elliott Management Corp. to review possible benefits of restructuring as a single company in Australia. The fund argues an overhaul could add more than $22 billion in value for investors and wants BHP to conduct an independent study. "We consider that the costs and risks of collapsing the DLC outweigh the potential benefits," BHP said. The producer said initial bids are expected in the June quarter as it advances the sale of U.S. shale assets worth about $10 billion. BHP follows its biggest peer Rio Tinto Group, which increased annual dividend payments by about 70%, and producers including South32 Ltd. in meeting investors' demands for higher returns. The company has potential to hand back about $4 billion in cash over the next 12 months, according to Macquarie Group Ltd. analysts.
Exclusive: GE Exploring Industrial Gas Engine Business Sale - Sources
" Reuters (02/16/18) Brumpton, Harry; Roumeliotis, Greg"
General Electric (GE) is exploring a sale of its industrial gas engine business, according to sources. The company has hired Citigroup to prepare a sale process for the business, which could be worth as much as $2 billion. Last month, CEO John Flannery indicated to investors and analysts for the first time that he was open to breaking up the company and said that a spinoff of any of its units was a possibility. Divesting the industrial gas engine business would help streamline GE's power division, which saw profits plunge 45% last year as sales of power plants and services fell sharply. Flannery, who took over as CEO last summer, said last November that GE would exit at least $20 billion in operations, as it tries to shore up its financial performance. GE's stock has lost half its value over the last 12 months. Investors, including Trian Fund Management, which sits on the company's board of directors, are pressuring Flannery to turn the business around. GE recently said it had reached a deal to sell parts of its overseas lighting business to a company controlled by former executive Joerg Bauer for an undisclosed amount.
Biggest Shareholder in Australia's Myer Seeking Support to Oust the Board
" Reuters (02/18/18) Kaye, Byron"
Solomon Lew, the largest shareholder in Australia's Myer Holdings Ltd., announced he will formally request a meeting to overhaul the entire board within weeks, accusing the department store firm of misleading investors about the success of its turnaround plan. Lew said in a letter to Myer shareholders that the company's Feb. 14 ouster of its CEO and promotion of its chairman to executive chairman could not help the company revive its declining sales. "Myer has a discredited chairman for a CEO, a failed board, a dead strategy, declining sales and profits, an artificially-inflated balance sheet, and massive liabilities," wrote Lew, whose retail investment company owns 10.8% of Myer. Lew said his Premier Investments Ltd. had received Myer's share register and would ask shareholders over the coming weeks to support ousting the board at an extraordinary general meeting. Premier would send a formal notice of meeting if it gets sufficient investor support. It requires backing from over 50% of Myer's shareholders to remove the board.
Nintendo Faces Calls to Split Stock to Aid Governance
" Financial Times (02/18/18) Lewis, Leo; Inagaki, Kana"
Investors are urging Nintendo, Japan's wealthiest company, to split its stock and widen its shareholder base amid concerns over corporate governance. The pressure has risen following Nintendo's global success, with the stock having surpassed ¥45,000 per share—an almost 10-year high that makes them out of reach of average retail investors due to a minimum trading limit of 100 shares. Investors backing the stock-split argue that a broader shareholder base would highlight a commitment to greater transparency. Macquarie analyst David Gibson called the move "a good first step." Despite positioning itself as a family-friendly company with a commitment to diversity, Nintendo has yet to break its tradition of an all-male board. Its gusto for corporate governance reform has always been low, said a source, and the market's love of the shares could produce the kind of complacency that will lower it further. Yutaka Suzuki, a governance expert at Daiwa Institute of Research (DIR), warned momentum for governance improvement was generally reduced in times of strong corporate earnings. In Nintendo's case, its shares have almost doubled in the past year, giving investors little reason to complain about its board structure or stance on information disclosure. Resistance to reform, say experienced asset managers, is especially stubborn in Nintendo's home city of Kyoto. Demands for a stock-split at Nintendo, which has been proposed or is being planned by at least three large shareholders, are expected to intensify ahead of its annual meeting in June.
Shareholder Group Issues Statement Regarding Aegean Marine Petroleum Network's Refusal to Engage With the Group Regarding Its Director Nominations
" PRNewswire (02/19/18)"
The Committee for Aegean Accountability, a group of shareholders collectively owning about 12.8% of the outstanding shares of Aegean Marine Petroleum Network Inc. (ANW), has issued a statement to convey its concerns regarding the board's refusal to engage with the committee over its director nominations for the company's 2018 annual meeting. The committee also expressed its concern that the board, which has relationships with founder Dimitris Melissanidis and a history of approving troubling related-party transactions, may be planning a dilutive transaction designed to thwart the efforts of shareholders to elect new directors at the upcoming annual meeting. Tyler Baron issued the following statement on behalf of the committee: "We are deeply disappointed by the Board's lack of response to our nomination of four highly qualified candidates for election to the Board at the 2018 Annual Meeting. The Committee has, in good faith, made repeated efforts at constructive engagement, including a public letter to the Company in December. To date, these efforts have been met with silence and dismissal from the Board. Unfortunately, this is consistent with the Board's established pattern of inadequately addressing the concerns of the very shareholders for which it has a fiduciary duty to represent, a pattern which required the formation of the Committee to begin with and has persisted. A foundational principle of corporate governance is that the owners of a company are vested with the power to choose who will best represent their interests and uphold the fiduciary duties to which the board of directors is bound. The Committee's nominations present shareholders with a compelling choice to restore accountability to the Board and unlock substantial shareholder value. Based on extensive feedback from shareholders, the Committee is confident that its views are broadly shared."
Elliott Reaffirms Its Views on NXP's Fair Value
" Business Wire (02/16/2018)"
Elliott Advisors (UK) Ltd., which advises funds that collectively hold an economic interest in NXP Semiconductors N.V. (NXPI) of approximately 7.2%, has released a presentation reiterating its conviction in its estimate of NXP's intrinsic value, supported by NXP's strong and consensus-beating 2017 fourth-quarter earnings. The presentation makes clear that NXP has a track record of consistent outperformance versus market expectations over the past year and underscores Elliott's belief that consensus EPS estimates for the company are stale. Given the company's top-line growth, which was in excess of peers in the second half of 2017, as well as its forward-looking growth and earnings potential, Elliott believes NXP is currently one of the most attractive companies in the semiconductor sector. In light of this data, Elliott reasserts its views that NXP deserves to trade in-line with peers, that the company is uniquely placed to radically enhance Qualcomm Inc.'s (QCOM) long-term strategy and to deliver value creation for Qualcomm's shareholders at take-out prices higher than $135 per NXP share. In summary, NXP's 2017 fourth-quarter results were very strong, beating consensus across revenues, gross margins, and EPS. The earnings report was consistent with NXP's robust performance throughout 2017. Elliott's conviction in the opportunity present at NXP is underscored by its sizable economic interest in the company. With market value of its economic interest of approximately $2.9 billion, Elliott is closely aligned with interests of its fellow NXP shareholders and is determined to help unlock a material valuation gap that Elliott believes exists today.
Brookdale Investor Not Backing Off Struggling Company
" Nashville Business Journal (02/16/18) Kennedy, Eleanor"
Land and Buildings Investment Management LLC sent a letter on Feb. 16 to fellow shareholders in Brookdale Senior Living (BKD), again stressing its concerns about the company's lack of transparency in an ongoing strategic review and indicating that it could have more to say following the senior-living giant's annual meeting at the expiration of the two groups' "standstill" agreement. The letter does not call for specific changes, but Land and Buildings has called for structural change at Brookdale since late 2016. The investment firm's founder and chief investment officer, Jonathan Litt, points to "headwinds" that could affect Brookdale's upcoming fourth-quarter earnings reports, including weather events, the flu season, and new competitors in its markets. Litt wrote, "In all likelihood the value of the company has been impacted in the past year due to the factors outlined above as well as possible attrition resulting from the strategic-review process. While for example a modest 20% or more premium to the current share price might be viewed as disappointing, we trust the board would have to weigh any such offers against remaining a going concern. We look forward to hearing more publicly from Brookdale soon."
Newell CEO Defends Management Amid Investor Calls for Change
" Wall Street Journal (02/16/18) Terlep, Sharon"
Newell Brands Inc. (NWL) CEO Mike Polk for the first time on Friday addressed Starboard Value LP's campaign to replace him and the entire board. Starboard has teamed up with three former executives of Jarden Corp., which Newell purchased in 2016, in an effort to change course at the company. Polk said Friday that Newell would consider Starboard's nominees to the board, a slate that includes the former Jarden executives. Polk argued that a difficult retail environment and not management missteps are behind the company's recent troubles. "There are plenty of things we can do better, there always are," Polk said when asked to respond to Starboard's criticism of Newell management. "This team is just focused on doing what we do best. We're not going to be distracted." Starboard counters that management missteps are responsible for the company's troubles in the past year. Newell, which has seen its shares drop roughly 40% from a year ago, said last month that it would unload brands and shutter half its factories to boost profitability. Polk also noted the company has suffered amid struggles at brick-and-mortar retailers. Newell "could have done better" managing working capital, but factors that drove down margins were mostly out of the company's control, he argued. Polk said Newell's rapidly growing e-commerce business plus a flood of new products will begin to show positive results later this year.
Under Investor Pressure, Danone Eyes More Profit Growth in 2018
" Reuters (02/16/18) Vidalon, Dominique"
Danone, the world's biggest yogurt maker, announced Friday it would accelerate sales growth in 2018 and deliver a further rise in profits amid pressure from investors. The food group reported overall 2017 earnings that slightly beat expectations, with strong demand for baby food and waters in China more than offsetting weak dairy sales. Shares in the company rose around 1%, outperforming France's main share index. The stock is down 7% so far this year, erasing almost half of last year's gains. Danone said it was targeting a double-digit rise in 2018 underlying earnings per share (EPS), excluding the impact of the sale of a $1.9 billion stake in Japan's Yakult announced this week. The company, alongside consumer goods peers such as Nestle and Unilever, is under investor pressure to boost results and it needs to deliver on 2020 profit margin and sales growth targets it set last year. In August 2017, Corvex Management purchased a 0.8% stake in Danone, following similar steps at Nestle and Procter & Gamble (PG). Danone has been considered a potential target for suitors or shareholders seeking better returns, given that profits and sales have frustrated some investors in recent years.
Facebook, Snap, and Other Firms Targeted by SEC Regulator's Attack on Dual-Class Shares
" Wall Street Journal (02/15/18) Michaels, Dave"
Securities and Exchange Commission member Robert Jackson Jr. said Feb. 15 that corporate titans who control companies through special classes of stock that give them extra voting power should have to give up the system after a limited number of years. Companies such as Facebook (FB), Ford Motor Co. (F), and Viacom (VIAB) have multiple classes of stock that do not expire until after the founder or long-time majority shareholder dies. According to Jackson, the practice "raises the prospect that control over our public companies, and ultimately of Main Street's retirement savings, will be forever held by a small, elite group of corporate insiders." Since 2013, about 16% of companies that have gone public on U.S. exchanges had at least two classes of stock, reports Dealogic. Jackson made his remarks during a speech at the University of California Berkeley Law School.
Danone to Sell Stake in Japan's Yakult for $1.8 Billion
" Bloomberg (02/14/18) Gretler, Corinne"
Corvex Management appears to have spurred Danone to sell about $1.8 billion worth of its shares in Japan's Yakult Honsha Co. The move slashes Danone's stake in Yakult from 21% to about 7%, although Danone will remain the largest shareholder. Yakult says it will offer as many as 24.6 million shares in a secondary sale, including over-allotment. Six months ago, Corvex Management built up its stake in Danone, the maker of Activia yogurt and Evian water. "We expect that there was slight pressure from ... Corvex, which could be the reason for this move as strategically it made no sense any more for Danone to have such a large minority holding," says Alain Oberhuber, an analyst at MainFirst Bank AG. The stake reduction will bring Danone more financial flexibility and allow management to focus more on its core business, according to Oberhuber. He adds that it is a suitable time to reduce the stake because Yakult shares have gained 29% in the past year. Danone did not comment on what it intends to do with the proceeds. CEO Emmanuel Faber has been seeking to re-energize Danone's largest business, yogurt and fresh dairy, because sales have suffered from tougher competition and marketing setbacks. Danone acquired soy-milk maker WhiteWave for $10 billion last year as it seeks to branch out into faster-growing organic food and drinks.
Sarissa Capital Reconstitutes Innoviva Board of Directors
" PRNewswire (02/13/18)"
Sarissa Capital Management LP has entered into an agreement with Innoviva Inc. (INVA) to reconstitute Innoviva's entire board of directors. Effective immediately, Jules Haimovitz, Sarah Schlesinger, and Mark DiPaolo will be added to the Innoviva board, joining recently added Sarissa designees George Bickerstaff III and Odysseas Kostas. Effective as of the upcoming stockholder meeting, the Innoviva board will consist of five directors: Haimovitz, Schlesinger, DiPaolo, Bickerstaff, and Kostas. DiPaolo and Kostas are principals of Sarissa Capital. The other three served together on the board of ARIAD Pharmaceuticals (ARIA) and played a major roll in turnaround efforts that led to the company being sold last year for more than $5 billion. DiPaolo said, "We are extremely pleased with this outcome at Innoviva, and we are excited to work with the new board which will be focused on optimizing capital allocation for the benefit of all stockholders. We commend the outgoing board for its demonstration of professionalism and support during this transition period."
Australia's Myer CEO Steps Down, Spurring Shareholder Revolt
" Reuters (02/13/18) Kaye, Byron"
Australian department store chain Myer Holdings announced Wednesday that CEO Richard Umbers will resign after its third profit warning in a year, marking a win for top shareholder Solomon Lew. The move adds momentum to Lew's campaign to overhaul the board for what he says is its failure to prepare the company for the explosion in online shopping. The move also indicates the board no longer has faith in its own turnaround plan, launched by Umbers after he became CEO in March 2015, which involved the shuttering of underperforming stores and building an online presence to rival global behemoths like Amazon.com and Britain's ASOS. Myer also announced that Chairman Garry Hounsell, who became chairman three months ago, has been promoted to executive chairman. On Feb. 9, Umbers said the company expected to post its worst half-year profit since 2009 and write down the value of its assets, while expressing confidence in his recovery plan. Lew declared that Myer's ouster of its CEO and promotion of its chairman "demonstrates a total lack of judgment from the Myer board and a complete abdication of responsibility." He added that Hounsell had "demonstrated a total lack of judgment in the way he has acquitted himself in the role, and deserves neither to be appointed nor paid as executive chairman," citing Hounsell's public defense of the company's strategy. Lew is rallying Myer's smaller shareholders to back a board upset at the 118-year-old company.
Starboard and BLR Deliver Letter to Monotype CEO and Board of Directors
" PR Newswire (02/13/18)"
Starboard Value LP, BLR Partners LP, and affiliates have penned a letter to Monotype Imaging Holdings Inc. (TYPE) calling for changes to the board of directors. The group is collectively one of Monotype's largest shareholders with a roughly 8.2% stake. In the letter, Starboard says Monotype's industry-leading font licensing business is a unique franchise with world-class intellectual property and multiple opportunities for long-term, sustainable growth. However, Starboard believes the pursuit of growth through costly acquisitions of non-core, money-losing businesses has been misguided and resulted in the destruction of significant shareholder value. It also says that Monotype has opportunities to improve margins and accelerate growth within the core font business. While Starboard said it is appreciate of the constructive dialogue it has had with Monotype, its conversations with the board regarding corporate governance and appointing highly-qualified, independent directors have been "extremely frustrating." It notes the Olapic acquisition marked a failure of oversight by the incumbent board and demonstrates the need for board reconstitution. Starboard's slate of nominees for election at the company's 2018 annual meeting include Kristen M. O'Hara, Chief Marketing Officer of Time Warner Inc. (TWX); Clifford Press of investment advisory firm Oliver Press Partners, LLC; George A. Reidel, former Chief Strategy Officer at Nortel Networks Corp.; and Edward Terino, the President of GET Advisory Services LLC.
Xerox's Third-Largest Shareholder Sues to Block Fuijfilm Deal
" Financial Times (02/13/18) Fontanella-Khan, James"
Hedge fund investor Darwin Deason, Xerox's (XRX) third-largest shareholder, has filed a lawsuit to prevent a merger with Fujifilm. Deason said in his complaint that Xerox failed to conduct a fair sale process that could have benefited shareholders. The "Xerox/Fuji transaction is the result of an improper and fraudulently concealed 'crown jewel' lock-up agreement that Xerox entered into with Fuji 17 years ago, that was never disclosed to Xerox's shareholders before the signing of the Xerox/Fuji transaction," Darwin alleged in the complaint. Xerox agreed last month to a complicated transaction that would see it combined with a joint venture the two companies operate called Fuji Xerox, giving Fujifilm a 50.1% stake in the merged entity. Under the terms of the deal, the joint venture will pay a $2.5 billion special cash dividend, or about $9.80 a share, to Xerox shareholders. Deason and investor Carl Icahn on Feb. 12 urged Xerox investors to boycott the deal with Fujifilm, saying that it significantly undervalues Xerox and favors Fujifilm. The two investors were especially irked by a comment made by Fuji CEO Shigetaka Komori after the deal was reached in which he said that it would "allow us to take control of Xerox without spending a penny."
Aimia Investor May Push for Board, Management Changes or Sale
" Bloomberg (02/13/18) Deveau, Scott; McNeely, Allison"
Mittleman Brothers revealed it could call for changes to the management or board of Canadian loyalty-card provider Aimia Inc., as well as a sale of all or part of the company. The investor first disclosed a stake in Aimia in September. Last week, Mittleman said it had upped its position to 10.6% at the end of January, and opened the possibility of agitating for changes at the company, according to an updated regulatory filing. Along with governance changes, the investment firm said it may also seek changes to Aimia's capitalization or dividend policy, the filing shows. Aimia—which runs Air Canada's loyalty program Aeroplan—saw its shares plummet more than 70% since May when Air Canada said it planned to launch its own loyalty program outside of its partnership with Aimia. Earlier this month, Aimia announced it would sell its loyalty program Nectar to J. Sainsbury Plc for 60 million pounds ($83 million).
Drug Company Innoviva Settles With Hedge Fund Sarissa: Sources
" Reuters (02/12/18) Roumeliotis, Greg; O'Donnell, Carl"
U.S. respiratory drug company Innoviva Inc. (INVA) will overhaul its board of directors as part of a settlement with Sarissa Capital Management LP, sources said Monday. The move comes two months after the hedge fund won a legal battle that enabled it to install two nominees on Innoviva's board of directors. Under the new settlement, Innoviva will accept three new independent directors to its board and oust five of its existing directors at its annual general meeting later this year, the sources said. The resulting board will have five members, two of which will be Sarissa representatives. Sarissa, which owns a roughly 3% stake in Innoviva, has accused the company of spending too much money on executive pay and board compensation, given that its only function is to manage the asthma and chronic obstructive pulmonary disease drug royalties it receives from GlaxoSmithKline Plc. GlaxoSmithKline is Innoviva's biggest shareholder with a 29.6% stake. Sarissa now intends to call for changes on how Innoviva spends money and for it to consider moves such as share buybacks and dividend hikes, according to sources. Last April, Innoviva told Sarissa it agreed to settle a challenge to its board just hours before a shareholder vote, only to back out after it discovered that BlackRock Inc.—one of its top investors that was supportive of Sarissa—switched sides and sided with the company, according to court documents. Delaware judge Joseph Slights ruled in December that Innoviva's "opportunistic maneuvers" to escape the agreement with Sarissa offended "basic notions of equity."
NXP Deal Is Likely Qualcomm's Best Defense Against Broadcom
" Wall Street Journal (01/13/18) Greenwald, Ted"
If Qualcomm Inc. (QCOM) wants to thwart a hostile takeover by Broadcom Ltd. (AVGO), its best bet to remain independent may be to complete its own massive acquisition. But it is running out of time to secure regulatory approval before a shareholder meeting in early March. Qualcomm has been angling for over a year to buy NXP Semiconductors (NXPI) for $39 billion, which would add 40% to Qualcomm's revenue. Qualcomm is unlikely to close the NXP acquisition until about three weeks after Chinese antitrust authorities have approved the deal, its last regulatory hurdle. Qualcomm also rebuffed Broadcom's revised bid last week—up to more than $121 billion from $105 billion—and accused Broadcom of ignoring the value NXP will bring. Yet Broadcom CEO Hock Tan has presented his target with a possible way out by threatening to withdraw if Qualcomm paid more for NXP than it originally agreed to. Qualcomm, Broadcom, and NXP all have said the price for NXP, $110 a share, is fair. But to close the deal, Qualcomm likely would have to increase the price, because NXP shares have traded above the offer price since the summer and Elliott Management Corp. is urging investors to demand $135 a share. In the best case, the closing of the NXP acquisition would happen in time for Qualcomm's shareholder meeting on March 6, giving it a win before shareholders vote for either Qualcomm's directors or a slate proposed by Tan. Qualcomm could put Broadcom on its heels by raising its offer for NXP, and analysts expect management to move fast as possible to buy NXP once they receive regulatory approval.
Icahn Says Fujifilm Deal Will Be 'Death Knell' for Xerox
" Wall Street Journal (02/12/18) Benoit, David"
Carl Icahn wants to put a stop to Xerox Corp.'s (XRX) deal to cede control to Fujifilm Holdings Corp. (FUJIY), which would combine Xerox with the joint venture it has run with Fujifilm for more than 50 years and give Fujifilm a 50.1% stake in the new entity. Icahn and fellow billionaire investor Darwin Deason, who together control 15.2% of Xerox's stock, have joined forces to vote against the deal—presenting a significant obstacle for the merger, which requires shareholder approval. They criticized company management, demanding before the deal was announced that Xerox find a new CEO, and also blasted the payment Xerox shareholders would receive, amounting to less than half of the new company plus $2.5 billion of dividend payments—equal to one-third of Xerox's market value prior to the deal talks being disclosed. "To put it simply, the current board of directors has overseen the systematic destruction of Xerox, and, unless we do something, this latest Fuji scheme will be the company's final death knell," Icahn and Deason wrote. "We urge you—our fellow shareholders—do not let Fuji steal this company from us." To kill the deal, the investors would use Fuji Xerox's 2017 accounting scandal as an opening for Xerox to get out of the contract.
Investor Says Shares of NTN Buzztime Are Undervalued, Sends Letter to Board of Directors
" StreetInsider.com (02/12/18)"
Investor Sean Gordon has written a letter to the board of NTN Buzztime Inc. (NTN), insisting that the stock is undervalued, with the potential to be worth $25 to $50. He also wants to be nominated to the board and for the company to grant shareholders proxy access. Gordon, who holds 8.63% of NTN's common stock, wrote, "By leveraging my 20 years' experience as a dedicated sales professional, I would add a critical core competency that is currently lacking in the Board of Directors. Furthermore, I offer numerous complimentary skills such as strategic planning, business building, e-commerce, operations, and in-depth knowledge of the financial markets. Finally, I have been a stockholder in the Company for approximately nine years, have participated in the Company's November 2016 registered direct offering, and have followed the Company along with its competitive landscape since 1991."
Starboard Unveils List of Candidates for Newell Board
" Wall Street Journal (02/12/18) Prang, Allison"
Starboard Value LP has named the 10 individuals it will nominate to the board of Newell Brands Inc. (NWL), which includes three former directors of the conglomerate who resigned from the board last month. The hedge fund—which owns a 4% stake in the company—will nominate ex-Newell directors Ian Ashken and Martin Franklin, both of whom co-founded Jarden Corp., and Domenico De Sole, former CEO of Gucci Group NV. Starboard also plans to nominate Bradley Alford, former CEO of Nestlé USA; Pauline Brown, former North America chairman for LVMH Moët Hennessy Louis Vuitton; Starboard managing member Peter Feld; Jim Lillie, former CEO of Jarden Corp.; Gerardo Lopez, former CEO of Extended Stay America (STAY); Starboard CEO Jeffrey Smith; and Charles Sonsteby, former CFO at Michaels Cos. (MIK). Starboard reportedly is angling to replace Newell CEO Michael Polk with Lillie and install Franklin as chairman, according to sources. Starboard's campaign comes less than two years after Newell's acquisition of Jarden Corp. Newell—which has seen its shares decline 41% over the past year—announced a plan last month to focus on nine consumer divisions and divest nearly everything else. "We firmly believe that the time has come for management and the Board to step aside and allow a team of proven operators and directors to put Newell on a path to significant value creation," Starboard's Smith said in the letter. The letter also asked Newell to postpone major divestiture decisions until the 2018 annual meeting. "We are concerned that the company's latest divestiture plan was a hastily-designed action to deflect blame from the recent poor performance," Starboard wrote.
Standard Life Aberdeen Takes on Mexican Airport Developer in Rare Move
" Reuters (01/12/18) Eschenbacher, Stefanie; Jessop, Simon"
Aberdeen Standard Investments, a subsidiary of Standard Life Aberdeen Plc, is urging Mexican airport developer Aeroportuario del Sureste (Asur) to change its shareholder structure. Fiona Manning, a senior investment manager at the asset manager, declared the company's shareholder structure was no longer adequate and that her team was calling for an extraordinary general meeting to allow shareholders to vote. Asur's control structure—which comes with two share classes and a technical assistance fee that it pays to the controlling shareholder—was first introduced more than two decades ago when the Mexican government privatized airports and needed the expertise of foreign investors. "These businesses no longer require the same level of expertise coming from outside of the businesses," said Manning. "We feel that now it is an appropriate time to challenge the structure of these businesses." She also called for the cancelation of the technical assistance fee, arguing it was unusual to keep such fees in place for so long and that they could hinder overall growth and ultimately earnings. Activist-style investments are rare in Latin America, and Aberdeen Standard Investments itself has a mixed track record in this region, having previously waged unsuccessful campaigns at two of Mexico's biggest companies. The investment team also attempted the same strategy three years ago with airport operator Grupo Aeroportuario Centro Norte (OMA), but its resolution did not win the required votes. However, Manning noted there was a realization within the controlling shareholders and OMA that some of its points were valid, and the technical assistance fee was later reduced to 4% and then 3%.
As Elliott Seeks Revamp, a Frustrated Hess Pushes Long View
" Bloomberg (02/09/18) Nussbaum, Alex"
John Hess, CEO of Hess Corp. (HES), hopes the company will survive its five-year battle with Elliott Management Corp. by aggressively selling a long-view plan. He says he has spent months meeting with more than 50 top investors to tout the prospects of the offshore Guyana field Hess is developing with Exxon Mobil Corp. (XOM). The field holds about 3.2 billion barrels of crude, but it will not flow for at least two years. Many shareholders remain unmoved by the plan, but Hess insists that it "is going to make our shareholders a lot of money." When asked in a Feb. 8 Bloomberg interview if he is frustrated by the company's 32% share drop since the start of 2017, Hess said, "Of course I am. But the fact is that the market is more short-term, more short-cycle now. I wish the stock price were higher. But I'm confident that as each quarter goes by and we get closer to first oil from Guyana, [and as the company hits goals for production and cash growth,] those milestones will help people that are waiting on the sidelines to get in." Elliott is demanding that Hess sell off assets, shift money from dividends to share buybacks, and that John Hess consider leaving his post.
SandRidge Energy Shakes Up Leadership Amid Investor Pressure
" Wall Street Journal (02/08/18) Armental, Maria"
SandRidge Energy Inc. (SD) announced Thursday it is ousting CEO James Bennett and CFO Julian Bott, marking a win for shareholders including Carl Icahn. The move comes a day after the oil-and-gas producer said it was considering an unsolicited merger bid from Midstates Petroleum Co. (MPO). SandRidge filed for bankruptcy in May 2016, and emerged months later with Bennett still at the helm. Soon after, it said it planned to buy Bonanza Creek Energy Inc. (BCEI), a bid since scrapped that was opposed by some of its biggest shareholders. Icahn, SandRidge's top shareholder, dubbed the company's Bonanza bid "nonsensical" and declared a poison pill the company had adopted as a defense mechanism would "make a totalitarian dictator blush." In a letter to Chairman John V. Genova last month, Icahn wrote: "We question why you refuse to hold James Bennett accountable for his history with SandRidge during a period of massive value destruction, including an ill-advised acquisition binge." SandRidge also said Thursday it would reduce general and administrative expenses by 33% and limit 2018 capital spending at $190 million, compared with a budget of $247 million in 2017. Independent director Bill Griffin will become CEO and president on a temporary basis as the company searches for a new CEO. Mike Johnson, the company's chief accounting officer, will become interim CFO. SandRidge's shares closed Thursday at $16.10, down 19% over the past 12 months.
Team Inc. Expands Board for Investor
" Houston Chronicle (02/08/18) Blum, Jordan"
Team Inc. (TISI) has named two new directors to its board as part of an agreement with Engine Capital. The hedge fund last year waged a successful campaign against former Team Inc. CEO Ted Owen, who resigned in September after Engine Capital attributed most of Team's financial difficulties to him. The company appointed a Schlumberger group president, Amerino Gatti, as its new CEO last month. Team is expanding the board from eight to nine members and installing Craig Martin, a retired CEO of Jacobs Engineering, and Brian Ferraioli, a former CFO of KBR, as new directors. "We look forward to their contributions to the board as our company continues to evaluate and execute on the comprehensive review of Team's operating plan and cost reduction initiatives," Gatti said. Owen oversaw Team's growth through acquisitions of Houston companies Furmanite and QualSpec, but Engine blasted the company for overpaying for both and failing to efficiently integrate the companies. The Furmanite business, which was embattled before it was acquired, has especially harmed Team finances, Owen has admitted.
Concerned Shareholders of Alexandria Minerals Announce Intention to Requisition Shareholder Meeting
" PR Newswire (02/09/18)"
A group of concerned shareholders in Alexandria Minerals Corp. announced Friday they plan to requisition a special meeting of investors. The shareholder group includes Eric Owns—a founder, CEO, and director of Alexandria—and NHP Asset Management AG. The meeting is being called to replace three existing directors with the group's "highly qualified and experienced nominees," Ian Mellon, Chris Hopkins, and Brian Murray. The shareholder group believes that Alexandria's existing board has failed to be responsive to shareholder expectations and has no coherent strategy for value creation. Instead, the board has created a special committee, charged with examining strategic alternatives for the company, with no defined timeline. The shareholder group believes that the strategic review process announced by the board is not in the best interests of shareholders or the company. "It is very clear that a newly constituted board of directors is required to unlock the full potential value of Alexandria's assets, and steward the Company through an important and active period in its growth story," the shareholders state. The concerned shareholders collectively own more than 5% of the outstanding common shares of Alexandria.