13D Monitor Real-time Activist Newsfeed


Xerox Shareholders Icahn, Deason Urge Company to Sell Itself to Rivals
" Reuters (02/20/18) Mukherjee, Supantha"

Xerox (XRX) shareholders Carl Icahn and Darwin Deason want the company to sell itself to a rival or a private equity firm. In an open letter published on Tuesday, the shareholders said Xerox could combine with a competitor that is willing to pay a significant premium. Icahn and Deason noted that Japan's Fujifilm Holdings is ready to offer a full buy-out on fair terms. Fujifilm announced a $6.1 billion deal for Xerox on Jan. 31, with plans to combine the company into their existing joint venture, Fuji Xerox.

NTN Buzztime Investor Says Shares Are Undervalued and Potentially Worth $25.00-$50.00
" PRNewswire (02/20/18)"

Sean Gordon, who owns an 8.63% stake in NTN Buzztime (NTN), has sent a letter to the company's directors requesting that he be nominated to the board. The letter argues that NTN's inability to grow sales has put a damper on its stock price, and its shares could be worth $25 to $50. Gordon says NTN's stock has depreciated 83% from $31 on Dec. 30, 2007, to $5.41 on Jan. 22, 2018. Gordon, who was a managing director at Barclay's Capital and built the firm's retail division from the ground up, wants to leverage his core sales skills as a 20-year sales professional to work with NTN to overcome its long-term sales malaise.

Energen's Oil Production Forecast Misses Estimates Amid Proxy Fight
" Reuters (02/20/18) Paul, Anirban"

Energen Corp. (EGN) reported a better-than-expected fourth-quarter profit, though its oil production expectations for this year lagged behind analysts' estimates. The oil and gas company is under pressure from Keith Meister's Corvex Management to sell itself, and Energen indicated on Feb. 20 that it would review Corvex's recent nominations to the board. Corvex, the company's biggest shareholder with a nearly 10% stake, proposed four candidates to the board last month.

Progress Software Adds Board Directors, but Not the Ones Nominated by an Investor
" Boston Business Journal (02/20/18) O'Brien, Kelly J."

Progress Software Corp. (PRGS) is adding two new directors to the board following pressure from top shareholder Praesidium Investment Management; however, it did not choose any of the investor's proposed candidates. Progress named to the board Sam King, the chief strategy officer of application security business Veracode, and Angela Tucci, the CEO of commercial real estate management software firm Apto. Progress Software CEO Yogesh Gupta called the new appointees "phenomenal executives with great track records" and noted that the two women make the company's previously all-male board more diverse. Gupta said the selection committee considered dozens of candidates, including those proposed by Praesidium. "We completely evaluated what we need on the board," Gupta said. "We completely evaluate the board's strengths and what we could do better." Praesidium began urging Progress Software Chairman Jack Egan to resign in September. It also wanted Progress to add five new board members of its choosing, including former Aspen Technology CEO Mark Fusco.

Hedge Funds Stand to Win as Qualcomm Boosts Offer for NXP
" Bloomberg (02/20/18) Stein, Charles"

Qualcomm Inc.'s (QCOM) raised offer for NXP Semiconductors NV (NXPI) will generate bigger profits for NXP's biggest shareholders, including several hedge funds. Elliott Management Corp., Soroban Capital Partners, Pentwater Capital Management, Farallon Capital Management, and other hedge funds hold seven of the top 10 positions in NXP and 47% percent of its total shares. Qualcomm boosted its offer for NXP by 16% from $110 a share to $126.50, which was enough to secure support from holders of about 28% of NXP's stock. Elliott, which has a 7.2% exposure in NXP, previously argued that Qualcomm should pay a minimum of $135 a share.

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.

Investors Join Resistance to Coronation Policies
" BusinessLIVE (South Africa) (02/20/18) Crotty, Ann"

Active Shareholder—established in 2017 by a group of nongovernmental organizations to focus on social and governance policies at JSE-listed companies—plans to vote against Coronation Fund Managers' controversial remuneration policy and at Tuesday's annual general meeting. "The incentive is clearly linked to company performance but details of the deferred portion are sketchy and we do not favor the level of discretion implied in the split of the 30% of profit," said Active in its voting statement, referring to the policy of allocating 30% of pretax profits to employees. In addition, Active will vote against the re-election of nonexecutive chairman Shams Pather to the board, the reappointment of lead independent director Alexandra Watson to the audit and risk committee, and Hugo Nelson's appointment to the audit and risk committee. Independence is an issue in each case. Pather has been on the board for 12 years and Watson has served for more than nine years. Nelson is being voted against because he is the former CEO of Coronation and there is no mention of the necessary cooling-off period. Active is also voting against the provision of inter-company financial assistance and share buy-backs. The provision of intercompany financial assistance and financial assistance for intercompany share acquisitions is also being voted against because Active says the resolutions are too broad and open-ended. Active is rejecting the share repurchase resolution because it is generally opposed to repurchases and believes this resolution is too general. Shareholder Theo Botha also intends to vote against many of the same resolutions, and has expressed concern about the independence of some of the directors up for re-election.

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.

Navigant Announces Receipt of Director Nominations From Engine Capital
" Business Wire (02/19/18)"

Navigant (NCI) announced Monday it has received notice from Engine Capital LP of its nomination of four director candidates for election to the board at the 2018 annual meeting. These nominees include Engine's founder and managing director, Arnaud Ajdler. Navigant's Nominating and Governance Committee has invited Engine's four nominees to be interviewed as part of its normal process, and the board will make its recommendation regarding director nominees in Navigant's definitive proxy statement to be filed with the Securities and Exchange Commission and made available to all shareholders eligible to vote at the 2018 annual meeting.

Mellanox Tags Starboard Proxy Action as Risk Factor in Annual Filing
" CTech (02/19/18) Reich, Dror"

Mellanox Technologies Ltd. (MLNX) listed proxy activity as a risk factor in its annual financial statement. This comes nearly three months after Starboard Value LP acquired a 10.7% stake in the company and began pushing for changes. According to Mellanox, the Israel-based company is facing "a potential proxy contest for the election of directors at our annual meeting, which could distract our management, divert our resources and, the outcome of which may significantly impact the strategic direction of the company and the company's financial performance. Responding to any proxy contest may be disruptive and costly for our business." The company indicated that the concentration of its shares in the hands of Starboard and a few other investors means that these shareholders may have "significant influence" over such major corporate decisions as mergers, consolidations, and asset sales. The hedge fund has recommended that Mellanox cut its workforce and become a leaner company in order to be more competitive in its industry.

ValueAct Takes Stake in Merlin Entertainments
" Financial Times (02/19/18) Pooley, Cat Rutter; Ahmed, Murad"

On Feb. 19, ValueAct revealed a 5.4% stake in Merlin Entertainments, becoming the U.K. company's third-largest shareholder. The San Francisco-based fund is the latest example of U.S. investors buying into companies in Europe with a view to agitate for changes to their performance. Lazard reports that U.S investors deployed $22 billion in Europe last year, more than double the $10 billion average spent there annually from 2013 to 2016. ValueAct has pushed for management changes at such companies as Rolls-Royce and driven merger and acquisition activity at Valeant Pharmaceuticals (VRX) and Willis Towers Watson (WLTW), among others. Sources say Merlin's management was "not alarmed" by ValueAct becoming one of its main shareholders, and its shares were up 2.5% during morning trading. According to Merlin, "We maintain strong relationships with all of our major shareholders. As a matter of course we do not comment on specific investor dialogue."

Independent Directors May Be Held More Accountable
" Economic Times (India) (02/19/18) Chitravanshi, Ruchika"

India's Ministry of Corporate Affairs is considering a mechanism that would make independent directors more accountable and ensure they are discharging their duties. According to a senior government official, "Independent directors are so central to better corporate governance. As a nation of half a million independent directors, a strong system should be in place. There is so much reliance on this entity as a separate class of directors and no one is looking at their code of conduct." The ministry could designate an institution for maintaining a database for independent directors of listed companies, describe the eligibility criteria and indexation method for them, and serve as a reporting mechanism for independent directors of listed companies.

Investors Pressure BHP Billiton Over Dual Listing
" Australian Financial Review (02/18/18)"

Institutional investors are urging BHP Billiton (BBL) to provide further details on its rejection of Elliott Management's proposal to unify the miner's dual-listed structure.  Earlier this month, Elliott published a study—conducted by FTI Consulting—that found the costs of unifying BHP's structure would be less than $US400 million.  BHP said last year that consolidating its structure in London would cost at least $US1.3 billion and save barely $US2.5 million a year; but the company has not published a formal rebuttal of Elliott's revised proposal for the company to be unified in Australia.  Baring Asset Management's Global Mining Fund manager Clive Burstow said he wants to see BHP respond to the 79-page study.  "I think the ball is now firmly in BHP's court, the FTI report was quite detailed," he said.  "The onus is now on BHP ... to come up with a strong defense as to why they believe that they should keep the dual-listed structure, or if they decide not to, why they believe it should be collapsed."  Plato Investment Management managing director Don Hamson also said BHP should give shareholders more details to explain its position, although Hamson is unsure whether BHP should push ahead with unification.  In recent weeks, other institutional investors such as Aberdeen Standard Investments and BT have suggested that BHP should provide a more detailed explanation for why it opposes unification at this time.  Debate over the dual listing is likely to resume this week when BHP CEO Andrew Mackenzie meets investors on Tuesday and reports what is expected to be the miner's best half-year profit since 2014.

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.

Cedar Realty Reaches Settlement With Hedge Fund Snow Park
" Reuters (02/16/18) O'Donnell, Carl"

On Feb. 16, Cedar Realty Trust Inc. (CDR) announced that it had reached a settlement agreement with Snow Park Capital Partners LP, which requires the retail-focused real estate investment trust to select one new independent board director in exchange for the hedge fund dropping its campaign. Snow Park will consult with Cedar on the selection of the new director but must ultimately support whatever candidate Cedar chooses. The new director will replace Paul Kirk, who recently announced that he would retire from the board. The agreement gives the hedge fund relatively little influence to push the company to explore a sale or other strategic alternatives. Meanwhile, Snow Park said it was satisfied with the company's internal investigation of sexual harassment allegations against CEO Bruce Schanzer.

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."

Tesco Gets More Investor Pressure to Sweeten Booker Price
" Bloomberg (02/16/18) Chambers, Sam; Fineman, Joshua"

Investors increasingly are pressuring Tesco Plc to sweeten its 3.9 billion pound ($5.5 billion) offer for wholesaler Booker Group Plc ahead of a shareholder vote on Feb. 28. Alpine Associates Management Inc., which has a 2.4% economic interest in Booker, opposes the deal and is calling for shareholders to vote against it. This follows comments from Sandell Asset Management Corp. that Tesco is getting Booker "on the cheap" and a recommendation from Institutional Shareholder Services against the deal. The transaction is subject to approval by 75% of Booker shareholders at the upcoming meeting.

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.

Avis Budget's Largest Investor Launches Fight for Three Additional Board Seats
" Wall Street Journal (02/16/18) Benoit, David"

SRS Investment Management, the largest investor in Avis Budget Group Inc. (CAR), wants to make changes to the car-rental company's board of directors. The investment fund said it would seek five total board seats, including two members it appointed to the 12-member board in a 2016 agreement. In January, Avis Budget enacted a "poison pill" to block SRS from exceeding 15% of voting stock after the two sides were unable to reach an accord to avoid a proxy fight. Avis says SRS had been insisting on a veto over board and management changes. SRS insists it made reasonable requests, but it wasn't willing to sign a three-year pact to not fight. Avis has been working to refresh its board and has hired a search firm to assist the effort. Avis also offered SRS a third director and a say in changes.

Shareholders Tell Myer to Embrace Lew's Retail Knowledge
" Australian Business Review (02/16/18) Greenblat, Eli"

Investors are pressuring Myer chairman Garry Hounsell to sit down with dissident shareholder Solomon Lew and resolve a months-long public spat between the two sides, a move that could see new directors with extensive retail experience appointed to the board. Lew's Premier Investments fashion conglomerate is Myer's largest shareholder with a 10.8% stake, while Lew—through both his public and family companies—is a major supplier to Myer. The pressure on Hounsell increased this week after he moved to oust CEO Richard Umbers following three profit downgrades, faltering sales, and a dwindling share price. Hounsell, who is now executive chairman of Myer as it searches for a replacement CEO, has refused to accept the three candidates for the board proposed by Lew. They are Premier Investments directors Tim Antonie and Terry McCartney and veteran property executive Stephen Sewell. Hounsell argues that as Lew and Premier Investments are major competitors to Myer it would be inappropriate to have them inside the boardroom. Now there is renewed pressure from other shareholders for Hounsell to reconsider his views, with support for McCartney—a highly successful former managing director of Myer Grace Bros—especially strong. There is also backing for Sewell, who has no known links to Lew and could be a strong asset in Myer's talks with its landlords as it tries to exit its leases.

Jana Orders Up Stake in Jack in the Box
" Financial Times (02/15/18) Dye, Jessica"

Jana Partners disclosed a 7.3% stake in Jack in the Box (JACK) in a regulatory filing on Thursday, saying the shares are "undervalued and represent an attractive investment opportunity." The fund said it had held talks with the company over its "capital structure, margins, capital allocation, franchise mix, and operations," and may hold additional discussions. The U.S. fast-food chain—which had a market cap of roughly $2.5 billion—operates its namesake burger chain and recently spun off its embattled Mexican fast-casual brand Qdoba to Apollo Global Management for about $305 million. The company's shares suffered a 12% drop last year, and are down by roughly the same amount so far in 2018 amid competition in the fast-food sector.

Japan's Corporate Code to Urge Companies to Explain CEO Hiring
" Nikkei Asian Review (02/15/18)"

The Japanese government is working to revise the country's corporate governance code as a means of improving management transparency and encouraging investors across the world to invest in Japanese companies.  On Thursday, the Financial Services Agency's (FSA's) council on corporate governance released proposed guidelines for dialogue between companies and investors. The new code calls for more transparency in the appointment and ouster of CEOs.  The current code calls for company boards to objectively assess the process of choosing the CEO and says this assessment should be reflected in how the CEO is selected. The new code is more specific, requiring listed companies to state whether they use independent committees in selecting CEOs and whether they have objective procedures for dismissing an underperforming CEO. These changes will be reflected in the new governance rules the FSA will publish later in 2018.

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.

Nestlé's Lackluster Results Fuel Daniel Loeb's Campaign for Strategy Change
" Business Live (02/15/2018) Koltrowitz, Silke"

Daniel Loeb has found new fuel for his campaign to overhaul strategy at Nestlé (NSRGY) in the company's forecast of modest organic sales growth this year, which comes after its slowest gain in at least two decades. Loeb's hedge fund Third Point took a $3.5 billion Nestlé stake last summer and has been pushing to speed up its transformation into a higher-growth, more efficient health food company. Europe's second-biggest public company has been buying and selling brands and cutting costs to try to improve performance and regain the favor of health-conscious consumers. Nestlé said organic growth, which excludes acquisitions and currency moves, was only 2.4% in 2017, missing even the lowest estimate of 2.6% in a Reuters poll of analysts. Nestlé also said it had no intention to increase its 23% stake in French cosmetics company L'Oreal. Last week, L'Oreal's CEO said the company was ready to buy back the Nestlé stake, should the Swiss group decide to sell. Such a sale figured prominently among Loeb's demands.

Investor Group Not Happy About Possible Lids Sale
" Indianapolis Business Journal (02/14/18) Orr, Susan"

An investor group that has pressured Genesco Inc. (GCO) to sell off some of its holdings is unhappy that the company is focusing on its troubled Lids Sports Group for divestiture. On Feb. 13, Genesco said it was "initiating a formal process to explore" the sale of Lids, which it has owned since 2004. According to James Bradford, Genesco's lead independent director and chairman of a special committee tasked with exploring the sale, "We believe Lids Sports Group is undervalued as part of Genesco and that its sale would generate capital that the company can deploy productively to further enhance shareholder value." The investor group led by Legion Partners Asset Management LLC and 4010 Capital LLC—which between them own slightly more than 5% of Genesco's total shares—said in a Jan. 16 filing that they believed the company's shares were undervalued and that it should "monetize certain segments of its business and return a significant amount of capital to shareholders." The investor group did not indicate then which parts of the company should be considered for a sale, but Legion Partners said after Genesco's announcement that it was not pleased with the decision. "We are disappointed that the board did not initiate a more thorough comprehensive review of all strategic alternatives. A sale of Lids, in our view, does not go far enough in resolving the significant underperformance issues at the company," said managing director Chris Kiper.

Bezeq Is Said to Accept Elliott's Request to Hire New Directors
" Bloomberg (02/15/18) Benmeleh, Yaacov"

Bezeq Israeli Telecommunication Corp. intends to work with Elliott Management Corp. to hire new directors for the board, according to a source.  Bezeq's board of directors reportedly will form a subcommittee with members who are not connected to majority shareholder Shaul Elovitch to find new directors.  The committee will also retain an executive search firm to make the hiring process more transparent, the source said.  Elliott in January upped its stake in Bezeq, Israel's biggest telecommunications firm, and pushed for changes to its ownership structure to boost its performance.  The company has been struggling since last June when authorities launched a securities investigation into Elovitch and other executives.  Lawyers for Elovitch—who later stepped down as chairman—have denied any wrongdoing.  Many investors and analysts back Elliott's argument that Bezeq's board needs to be shaken up to improve its performance after the company struggled in recent years amid intense competition.  Elliott urged Bezeq's board to hire a recruitment firm to help find five independent directors.  The company has been debating launching bundling services to better compete with rivals, but managers have been slow to act because of the uncertainty surrounding the investigation, the source said.  Bezeq likely will nominate new directors at the company's annual shareholder meeting this spring, acting Chairman David Granot said last month.

Investor Says Others Share Concerns Over Booker Deal
" The Times (London) (02/15/18) Hipwell, Deirdre"

Sandell Asset Management claims to have backing from a growing number of investors in its campaign to get Tesco to pay more for Booker Group.  The U.S. hedge fund—which owns a 1.75% stake in Booker—declared last week that it planned to vote against Tesco's proposed £3.7 billion takeover of the cash-and-carry wholesaler.  It argued that Tesco was "getting a great asset and a great management team on the cheap," according to a letter to Booker's board.  Sandell said Wednesday that since it had sent the letter it had received feedback from various Booker shareholders, many of which "validated our thinking and position on the deal."  Sandell wants the terms of the offer changed so that Booker pays out all its 2018 profits as a closing dividend to shareholders rather than just 65% as planned.  It also believes that the fair value for Booker is between 255p and 265p a share—significantly above the 205.3p a share value of Tesco's bid for Booker when the deal was agreed last January.  Booker's shares were unchanged yesterday at 221p a share.  However, one major investor noted he thought it unlikely the deal would be stopped.

Litt to Take On RLJ's Board Choice
" Washington Business Journal (02/14/18) Cooper, Rebecca"

Land & Buildings Investment Management LLC wrote to fellow shareholders of RLJ Lodging Trust (RLJ) on Wednesday to protest the company's new board appointment of Robert McCarthy, former COO of Marriott International Inc. The investor also declared it intends to propose its own slate of board members at this year's annual meeting. Land & Buildings founder Jonathan Litt argued in his letter that RLJ should have installed a director with more of a financial than an operational background. "Given the horrible performance of RLJ shares following numerous capital allocation missteps, the most glaring need in the boardroom is relevant capital markets and REIT experience," Hitt wrote. One misstep, Litt said, was RLJ's rejection of an all-cash offer of $24 per share to be acquired by Blackstone (BX). The offer came as RLJ was preparing for its 2017 acquisition of Felcor Lodging Trust. Ultimately, RLJ spurned Blackstone's offer in favor of growing its scale through its own purchase—although some analysts questioned the combination, observing that FelCor's portfolio did not fit into RLJ's strategic vision. Land & Buildings—which owns 2% of RLJ's shares—began calling for RLJ to consider a sale right after the company closed its acquisition FelCor in September. The investor had proposed several other candidates for RLJ's board, according to Litt's letter. He also accuses senior management of receiving "outsized compensation."

Japan's New Business Code to Call for More Outside Directors
" Nikkei Asian Review (02/15/18)"

The Japanese government will encourage companies to utilize a more transparent decision-making process through measures such as allocating at least one-third of board seats to outsiders. The Financial Services Agency (FSA) is set to include the guideline in this year's corporate governance code, replacing the old standard that called for only two or more outside directors. While companies will not be obligated to follow the code, they will be required to explain their reasoning for noncompliance. Outside board members comprise 84% of boards at companies in the United States, 69% in France, 61% in the United Kingdom, and just 31% in Japan. Making Japanese companies more attractive to foreign investors also is behind the FSA's call for greater transparency in corporate governance.

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.

Yakira Capital Management Sends Public Letter to Board of Safeguard Scientifics
" Business Wire (02/14/18)"

Yakira Capital Management Inc. sent a public letter to the board of Safeguard Scientifics Inc. (SFE) on Wednesday expressing frustration with the company's inability to address shareholder value destruction and to adopt key measures to drive value for shareholders.  Yakira—the company's 10th largest shareholder with a 2.41% stake—is calling for a management overhaul, specifically the replacement of the current CEO and COO, with individuals who have experience successfully exiting portfolio companies in the VC/PE business.  In addition, Yakira is seeking a shakeup of the board, which includes reducing the number of directors to five and installing at least two new independent members chosen by shareholders.  It also argues that board pay should be lowered to better reflect the size of the company, with any incentives vested upon shareholder return targets.  Furthermore, Yakira wants a new performance-based compensation plan for management which is based on the amount of capital returned to shareholders and the share price, with limited upfront cash salary and bonuses.  Finally, Yakira is seeking additional cost cutting measures: while the original disclosure of $5 million to $6 million of cost reductions is a start, it believes there is significant room for further reduction to right-size the company's operational expenses.

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 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 Defends Fujifilm Deal After Icahn Criticism
" Wall Street Journal (02/13/18) Hufford, Austen"

Xerox Corp. (XRX) defended its deal with Fujifilm Holdings Corp. in a letter to shareholders Feb. 13, a day after Carl Icahn said he would vote against the merger. Late last month, the printer-and-copier pioneer agreed to combine itself with a joint venture it has run with Fujifilm for over five decades and give the Japanese company a 50.1% interest in the new entity.  Icahn and fellow billionaire Darwin Deason, who together control 15.2% of the stock, announced Feb. 12 they plan to vote against the tie-up. On Tuesday, Xerox pushed back against what it described as the investors' "mischaracterizations" of the deal, noting that the agreement followed a year-long review of alternatives. For instance, the company insisted that current Xerox shareholders' rights will be safeguarded in the combined company, having the chance to designate five directors on a 12-member board.

RBR Says Credit Suisse Results Show More Action Needed
" Reuters (02/14/18) Shields, Michael"

RBR Capital Advisors is escalating calls for a strategic shakeup at Credit Suisse after Switzerland's No. 2 bank reported its third consecutive annual loss on Wednesday, hit by writedowns on U.S. deferred tax assets. "The results confirm that there is need for additional action. Now it is up to Credit Suisse to show alternatives," RBR said. RBR—which last year disclosed a stake in Credit Suisse worth roughly 100 million Swiss francs ($107 million)—has been seeking a breakup of the bank and proposed last month the group could create "enormous" value by replacing its IT platform and slashing jobs.

Chipotle Taps Taco Bell CEO Brian Niccol as New Top Executive
" Wall Street Journal (02/13/18) Jargon, Julie"

Chipotle Mexican Grill (CMG) has hired Taco Bell CEO Brian Niccol to serve as its next chief executive, as the struggling fast casual restaurant chain attempts to reverse its recent slump. The 43-year-old will assume his new role on March 5, replacing Chipotle co-founder and Executive Chairman Steve Ells. He had stepped down as CEO in 2017 amid mounting pressure related to food safety incidents at the chain's eateries and declining foot traffic. "Brian is a proven world-class executive, who will bring fresh energy and leadership to drive excellence across every aspect of our business," Ells wrote in an official statement. "His expertise in digital technologies, restaurant operations, and branding make him a perfect fit for Chipotle." Chipotle has struggled to woo back customers after food-safety scares began in 2015, including outbreaks of E. coli and other viruses. The company's problems attracted the attention of William Ackman, who negotiated to fill two seats on Chipotle's board.

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."

Peltz Steps Down From Mondelez Board, Trian President to Take Seat
" Reuters (02/13/18) Cavale, Siddharth; S, Sangameswaran"

Nelson Peltz will exit the board of Mondelez International Inc. (MDLZ) but retain the board seat for Trian, after saying he was pleased with the progress made by the confectionary company since he joined in 2014. Peltz will leave the board in March to devote more time to the other boards on which he sits. Trian President Peter May will replace him. Mondelez has also named former Reynolds American CEO Debra Crew to the board. Mondelez shares rose 20% during Peltz's tenure on the board. "As a large shareholder, Trian remains a strong believer in the future success of Mondelez International. The company is well positioned to continue to create value for its shareholders under Dirk," Peltz added, referencing Dirk Van de Put, who became Mondelez's CEO in November. Trian controls approximately a 3% stake in Mondelez.

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).

Starboard Blames Monotype Buying Spree for Lost Value
" Bloomberg (02/12/18) Deveau, Scott"

Starboard Value says Monotype Imaging Holdings Inc.'s (TYPE) acquisition strategy has cost shareholders about $12 per share in lost value. The hedge fund, which holds with its partners an 8.2% stake in Monotype, has called on the company to abandon the strategy. According to sources, Starboard believes the company could be valued at $34 a share if it sold certain non-core businesses and returned margins to their previous levels. The company said in January that it had engaged in talks with Starboard since September and was disappointed it decided to launch a proxy contest, indicating that the hedge fund rejected the solutions it offered to avoid a proxy fight. Among other things, sources say Starboard believes Monotype overpaid for its $149 million acquisition of Olapic Inc. and argues that its performance has fallen short of expectations and caused the company to repeatedly lower its forecasts for the unit. Monotype also said last month that it has been working with JPMorgan Chase & Co. (JPM) since July to explore a broad range of strategic alternatives, including a possible sale.

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."

Broadcom Reduces Qualcomm Board Nominees Before March 6 Showdown
" Reuters (02/13/18) Venugopal, Aishwarya; Mukherjee, Supantha"

Broadcom Ltd. (AVGO) on Tuesday reduced the number of board seats it is pursuing at Qualcomm Inc. (QCOM) from 11 to six. The firm also emphasized that its offer was only good until the end of Qualcomm's shareholder meeting on March 6. Broadcom's move comes a day before the semiconductor companies plan to meet to discuss the proposed $121 billion deal, which will be their first such talks, according to sources. Broadcom said it would withdraw its offer if it was not accepted by Qualcomm's executives or unless its six nominees were elected at the shareholder meeting. Broadcom upped its cash-and-stock offer last week to $82 per share from $70, and made other concessions, including offering to pay Qualcomm an $8 billion breakup fee if antitrust regulators block the deal. Qualcomm spurned the revised offer, saying the proposal undervalued the company and fell short of commitments on regulatory issues. Broadcom nominated a slate of 11 directors to replace Qualcomm's board after the chipmaker rejected its first offer, worth $103 billion.

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
" (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.

Starboard Delivers Letter to Newell CEO and Board of Directors
" PRNewswire (02/12/18)"

Starboard Value LP, a significant shareholder of Newell Brands Inc. (NWL), which together with the other participants in its solicitation beneficially owns approximately 4% of the company's outstanding shares, today announced that it has delivered a letter to Michael B. Polk, CEO of Newell, and the Newell board of directors. The letter expresses serious concerns regarding Newell's significant underperformance under its current leadership. The letter also confirms that Starboard has nominated a full slate of director candidates, including three former, seasoned operators of Jarden Corp., for election to the board at the company's 2018 annual meeting of stockholders.

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%.

Next SEBI Board Meet to Discuss New Corporate Governance Norms
" Bloomberg (02/10/18)"

The Securities and Exchange Board of India (SEBI) confirms that it will take up a special panel's report on corporate governance at its next board meeting. The high-level SEBI committee, headed by banker Uday Kotak, has suggested a major overhaul of corporate governance norms for listed companies in the report submitted back in October. SEBI sought public comments on the report until Nov. 4. The report called for limiting the chairmanship to only non-executive directors and appointing at least one female independent director.

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.

Starboard to Launch Proxy Fight to Replace Entire Newell Brands Board
" Wall Street Journal (02/09/18) Terlep, Sharon; Benoit, David"

Newell Brands Inc. (NWL) took over Jarden Corp. in a $19 billion deal two years ago. Today, the sellers are angling to wrest back control of the conglomerate. Displeased with how it has been run since the 2016 deal, a trio of former Jarden executives has reportedly joined with Starboard Value LP in an effort to replace the entire Newell board of directors and oust CEO Michael Polk. Starboard and its allies have a stake of about 5% in Newell. Former Jarden Chairman Martin Franklin resigned as a Newell director in January after trying unsuccessfully to seize control of the board and reverse initiatives put in place by Polk. Franklin, ex-Jarden CEO Jim Lillie, and former executive Ian Ashken will work with Starboard in its campaign. They contend that Polk and Newell's board made critical missteps in integrating the two companies. Newell said Feb. 9 that Starboard informed the company it plans to nominate 10 board candidates. "Newell Brands has a diverse, experienced Board that is committed to acting in the best interests of the company and all shareholders," Newell said in a statement. "The Newell Board and management team continue to take decisive action to deliver strong financial and operational performance and are committed to achieving Newell Brands' transformation objectives."

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.

Investment Association Says TalkTalk Placing Ignores Shareholder Rights
" Reuters (02/08/18) Vijayaraghavan, Abinaya"

Britain's Investment Association—the trade body that represents U.K. investment managers—declared Thursday that TalkTalk raising cash from shareholders through a placing was "a blatant disregard of the industry-accepted standards." Broadband provider TalkTalk said it would raise up to 200 million pounds ($280 million) in a placing to help finance a plan to link three million U.K. homes and businesses with ultrafast broadband and keep it competitive with larger peers. The Investment Association said the company's placing of its shares representing 19.99% of its existing share capital on a non-pre-emptive basis disregarded shareholder rights. "Pre-emption rights are a vital shareholder protection and their misuse poses a serious threat to shareholder and investors' interests—the U.K.'s pensioners and savers," an Investment Association spokesperson said. A TalkTalk spokesman countered that the company engaged with its investors ahead of the book building process. "We also ensured the allocation of the placing respected pre-emption by including those private shareholders who chose to participate," he added. The company on Thursday also slashed its full-year earnings forecast and said it would reduce its dividend to help fund the new network and rebuild its customer base.

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.


What Role Will Nelson Peltz Play on Procter & Gamble Co. Board?
" (OH) (02/19/18) Monk, Dan"

Procter & Gamble Co. (PG) has announced committee assignments for Nelson Peltz, who gained a P&G board seat by waging the most expensive proxy fight in U.S. corporate history. The election cost at least $65 million and ended in a virtual tie, prompting two recounts and ultimately a compromise announced in mid-December. P&G agreed to add Peltz and Novartis (NVS) CEO Joseph Jimenez to its board, beginning March 1, and modify its compensation program to give more weight to how the firm's performance compares to P&G's rivals. Peltz recently exited Mondelez International Inc.'s (MDLZ) board to focus more fully on P&G. Both he and Jimenez will serve on P&G's innovation and technology committee, which advises management on research and commercial discoveries that help the company grow. Jimenez will join the compensation and leadership development committee.

Gender Diversity on Boards Improves, but More Ground Needs to Be Covered: Experts
" Economic Times (India) (02/19/18) Bhattacharyya, Rica"

The law that mandates companies to have at least one woman director on their boards has helped improve gender diversity in India's corporate boardrooms. However, much ground still needs to be covered, say experts, especially as almost 25% of the female appointees on boards are family members of the owners. As on Jan. 26, PrimeDatabase reports that out of 1,723 companies listed on the National Stock Exchange (NSE) of India, 1,667 of those firms had met the mandate of one woman director in the boardroom. Out of those, 425 companies have women from either a "promoter group" or family. NSE data showed that 285 companies had more than one female board member, while 56 companies did not even have one woman director.

Newell Pressured By Weak Sales Amid Investor Calls for Changes
" Wall Street Journal (02/16/18) Terlep, Sharon"

Newell Brands Inc. (NWL)—which is facing a proxy fight from Starboard Value LP—blamed the Toys 'R' Us Inc. bankruptcy and other beleaguered brick-and-mortar retailers for a 1.9% decline in sales in the fourth quarter. "The entire Board and management team recognize what needs to be done and we have taken decisive action to deliver the results and value our shareholders expect," said CEO Mike Polk. Newell—a conglomerate that makes everything from Elmer's glue to Mr. Coffee machines—relies heavily on its retail partners to sell its wide portfolio of products. It claimed the Toys 'R' Us bankruptcy damaged sales in its baby business, while inventory reductions by office superstores hurt the writing unit. Earlier this month, Starboard Value teamed up with three former executives of Jarden Corp.—which Newell purchased less than two years ago in a $15 billion deal—in a campaign to change course at the company. Frustrated about how the sprawling collection of consumer brands has been run since the 2016 deal, former Jarden management want to replace Polk and run the business. Newell announced last month that it would unload brands and shed half its factories in a bid to improve profitability, marking a reversal for the company, which has spent billions of dollars to acquire rivals. Newell, which has a market value of nearly $14 billion, has seen its share price plummet about 40% from a year ago.

Norway's Quota for Women on Corporate Boards Has Mixed Results
" Economist (02/17/18)"

The highlight of the opening-bell ritual at the London Stock Exchange on Feb. 2 was a roll call to honor 27 global investors. They were praised for pledging allegiance to the "30% Club," a group that campaigns for a 30% proportion of women on corporate boards around the world. In much of western Europe, such efforts follow a protracted push by governments. Norway in 2008 obliged listed companies to reserve at least 40% of their director seats for women, or be dissolved. In the following five years more than a dozen countries set similar quotas at 30% to 40%. Ten years after Norway's move, the worst fears about such efforts have not been seen. Serving on too many boards is a challenge, concedes Richard Hayden of TowerBrook, an investment firm in London, but many male directors are equally stretched. According to ISS Analytics, 19% of female directors of Europe's STOXX 600 companies, which are predominantly in markets with quotas, sit on at least three boards. But so do 15% of male directors.

Investors Urge Shipping to Improve Its Governance
" ShippingWatch (02/14/18) Krigslund, Niklas"

The shipping sector in recent years has escaped the world's growing focus on corporate governance and environmental considerations, but not anymore. More investors are setting requirements that shipping companies must be run according to principles of corporate governance, as well as requirements for compliance with environmental regulations and human rights. The pressure is coming from private investors, banks, and top investors such as BlackRock (BLK), which recently introduced new requirements concerning social responsibility. The Norwegian Global Pension Fund caused a stir in shipping when it decided to ditch its investments in four carriers, including Evergreen, due to them having scrapped vessels on beaches in South Asia. Bad governance has deterred investors from placing money in shipping, says Amit Mehrotra, lead analyst for U.S. Transportation & Shipping at Deutsche Bank, who has criticized shippers for placing management's interests above those of shareholders. The worst-governed companies have lost 90% to 95% of their stock market value over the past five years, according to Mehrotra. "I have zero tolerance for bad governance," says Mehrotra. "Most people I talk to from the institutional investor base have zero tolerance for it as well."

Investors Flock Back to Japan's Stock Market
" Nikkei Asian Review (02/15/18) Maruyama, Daisuke"

Data compiled by Nomura Securities from investor filings reveals 103 instances last year of foreign investors buying large blocks of Japanese equities to push for significant management changes, marking a nine-year high. The total was 128 in 2007 and 133 in 2008. These filings are required when an investor takes a 5% or larger stake in a listed company, and Japan's disclosure rules require investors to state in these filings whether they are likely to propose increasing shareholder returns or executive appointments. Experts say investors are flocking to Japan in response to the corporate governance code implemented in 2015 that has made companies more responsive to shareholders. Also responsible for the increase are a flood of liquidity worldwide and higher stock prices. The average increase in share prices among companies engaged by investors was 33% last year, compared with 19% for the Nikkei Stock Average as a whole.

Investing: Activism Enters the Mainstream
" Financial Times (02/14/18) Fortado, Lindsay"

The founding class of shareholder activists, including Carl Icahn, Elliott Management's Paul Singer, and Pershing Square's Bill Ackman, have helped spawn a new generation called the "sons of activists." This new group includes Scott Ferguson, the first analyst Ackman hired at Pershing Square in 2003, Alex Denner, an Icahn acolyte, and Quentin Koffey, who left Elliott after seven years to help launch DE Shaw's first activist practice. Observers say many of the up and coming generation are adopting a different style of investing that is more data-driven, and they are more eager to work with management behind the scenes and hold positions for longer. According to Perella Weinberg Partners co-founder Joseph Perella, "The goal is the same, making money. [But] there are more players in the activism space now and more importantly, they are much more institutional than back when activism was getting started in the 1980s." Skadden Arps partner Rich Grossman adds, "They are definitely respected and companies do pay attention when one of these 'sons of activists' shows up at their doorstep. Some of them have raised significant amounts of money in their own right and have substantial funds at their disposal." Observers say some members of the younger generation have already made names for themselves, including Keith Meister of Corvex Management, Mason Morfit of ValueAct, and Jesse Cohn of Elliott.

How to Get Your Board to Prize Sustainability
" GreenBiz (02/13/18) Sweet, Cassandra"

Large companies are under increasing pressure from investors to be environmentally responsible. However, not all corporate boards are up to speed on what their company can do to improve in this regard.  It falls on sustainability managers to propose initiatives that allow their company to green its operations while providing a positive message around its corporate responsibilities. Rose McKinney-James, a member of MGM Resorts International's (MGM) board and a clean-energy consultant, states, "It's important to position your argument to make the business case for what the company is undertaking and what your main goals are." To this end, MGM has slashed its energy usage via efficiency measures and installed more than 8 megawatts of solar panels on some of its Las Vegas facilities.

Female Board Representation in SGX-Listed Firms Rises to 10.8% in 2017: Study
" Business Times (Singapore) (02/13/18) Mui, Rachel"

Data from Singapore's Diversity Action Committee (DAC) reveals that the country's listed companies experienced improvement in terms of gender diversity, with a 10.8% female representation on their boards in 2017, an increase from 9.9% in 2016 and 9.5% in 2015. The proportion of all-male boards in Singapore fell slightly from 55% three years ago to 50% in 2017, according to the statistics. Top 100 primary-listed companies led the way, achieving 13.1% women's participation on boards, up from 10.9% in 2016. This represents the highest increase over the past three years. In contrast, Norway and France both have a female board representation of 42% in listed firms, followed by the United Kingdom (27.6%), Australia (26.1%), and the United States (21%). Within Asia, females in Malaysia hold a 19.2% share of board seats among the top 100 listed firms. Hong Kong fared slightly better than Singapore at 13.3%, while China, Japan, and South Korea were among the countries with the least diversity. Research by the DAC also shows that new board seats were still primarily filled by men. About 40% of directors appointed to the boards of the top 100 firms—and all Singapore Exchange listed companies over the past three years—were first-time directors, debunking the notion that boards prefer experienced directors, DAC's research has found. Most of these new appointees were men, or nearly 70% for the top 100 primary-listed companies, and more than 80% for all SGX-listed companies.

Opinion: How Much Disruption Can Shareholder Activists Cause?
" Compliance Week (02/13/18) Balet, Stephen"

Shareholder activism was strong in 2017 and shows little sign of waning in 2018. Because of this, an increasing number of boards have moved to avoid the disruption sown by activist investors. While underperforming companies typically have been the most likely to be engaged, activists increasingly are setting their sights on healthy companies too. Most activist engagement takes place at companies with market capitalizations of under $2 billion, but well-known companies with capitalization as high as $225 billion are also being engaged. Furthermore, the goal of activists is evolving. In some instances, activists are encouraging public companies to drop deals, which is a shift from the more familiar call for higher prices to be paid to the engaged company. By being cognizant of the level of disruption in an activist engagement, a company can better manage the situation with the least amount of negative effects. The most disruption is likely when an activist investor demands change in the structure of the engaged company—such as a split, a sale of a division, a spin-off, or sale of the whole operation. Communicating with employees, suppliers, and customers can help engaged companies manage the disruption. Companies in activist situations should spend time explaining the continued confidence in the going-forward plan and keep employees steadily updated through townhalls and other communication initiatives. In an acute activist situation, the C-suite often spends 30% to 50% of its time on the situation which is greatly disruptive in and of itself and can often have a debilitating effect on the performance of the company.

Shareholders Win a New Legal Tool to Challenge M&A Deals
" Financial Times (02/12/18) Indap, Sujeet"

In January, investor Carl Icahn made a "220 demand" on SandRidge Energy (SD)—where he owns 13% of the company—using a once obscure section of the Delaware corporate law code that allows shareholders to request corporate books and records if they suspect wrongdoing. More shareholders and their lawyers are turning to 220 inspection demands to challenge the process and price of M&A deals, and a recent string of Delaware court decisions has shown that these lawsuits are difficult to win and even to bring in the first place. The rulings have largely eliminated nuisance lawsuits that targeted companies as soon as deals were announced by attorneys claiming the price was too low. Delaware courts are now promoting the idea that, as long as shareholders know the key circumstances of transactions and are comfortable with the terms of a deal, judges have no reason to intrude. However, the 220 demand has emerged due to concerns that real wrongdoing cannot be easily investigated if courts are quick to dismiss lawsuits, giving aggrieved shareholders the opportunity to determine whether a company improperly sold itself on the cheap. In a December ruling in Delaware, the court indicated that shareholders need only show a "credible basis" that wrongdoing occurred and that the information request is essential for investigation, opening up a new avenue for attorneys to challenge M&A deals. Experts say legal battles will now center on what information companies should be forced to surrender.

Updates on Continuous Disclosure and Corporate Governance in Securities Law
" Lexology (02/07/18) Truswell, Jon C."

Canada implemented mandatory disclosure of women on boards and in executive officer positions three years ago, and the new rules have marginally improved female representation. The percentage of women holding board seats increased slightly to 14% last year, up from 11% in 2015, while the percentage of issuers having at least one woman on the board increased to 61% in 2017 from 49% in 2015. Twenty-two percent of reporting issuers disclosed a general diversity policy, not a policy relating to the identification and nomination of female directors. Only 21% of the sample size of 722 reporting issuers had adopted term limits. Of those issuers, 50% had an age limit, 23% had a tenure limit, and 27% had both. The most common reason for failure to adopt term limits is the potential for a negative impact on the continuity and experience of the board. Among other trends in governance and executive compensation, there were 165 say-on-pay votes in the first half of 2017, up from 159 in the first half of 2016. Disclosure of board-shareholder engagement in proxy circulars increased, with more than 70% of TSX60 issuers disclosing engagement practices.

The Lone Wolf
" Business Today (India) (02/25/18) Adhikari, Anand"

In a short span of seven years, India's Institutional Investor Advisory Services (IiAS) has managed to send shivers down the spine of several big companies, giving its opinion on every major issue concerning shareholders. IiAS is modeled after U.S.-based Institutional Shareholder Service (ISS), but in India, proxy advisory firms are in the advisory space because regulation does not allow them to collect proxies. ISS, Glass Lewis, and Egan Jones put their weight behind Nelson Peltz in his effort to gain a board seat at Proctor & Gamble, but India has not seen such investor-activism. Still, institutional investors are waking up in India, partly due to a regulatory push. IiAS was the first proxy advisory firm to root for Nandan Nilekani after the fight between founders and professionals at Infosys came out in the open. Vishal Sikka resigned as CEO at 9 a.m. on Aug. 18. "Our report suggesting Nilekani for the top job was up at 12," says Amit Tandon, co-founder and MD of IiAS. Tandon now faces a defamation suit from cigarette major ITC for advising shareholders to vote against a resolution for a monthly remuneration of '1 crore to Y.C. Deveshwar, currently the non-executive chairman. The ITC case will also determine the fate of the fledgling proxy advisory firms in India.

U.S. Corporate Spinoffs to Boost Bank Lending
" Reuters (02/08/18) Adler, Lynn"

Bankers are preparing to finance an expected wave of new spinoff deals as U.S. companies consider shedding businesses to streamline and enhance profitability, amid pressure from activist investors. Last month, 11 transactions over $5 billion each for a total of $94 billion represented the largest number of mega-mergers globally for any January on record, according to Thomson Reuters Deals Intelligence. General Electric (GE) is considering breaking up or listing businesses separately; Honeywell (HON)—facing activist hedge fund pressure to spin off its aerospace division—has said it will spin off divisions into two independent publicly traded companies; and a number of large tie-ups may have to sell assets to receive favorable antitrust rulings. This is expected to generate opportunities for bankers to arrange syndicated loans to finance the new stand-alone companies, or asset sales to new strategic buyers. "We will see more spinoffs driving M&A opportunities, because the age of conglomerates is over. It's now the age of efficiency," said Art de Pena, managing director and head of loan syndicate & distribution at MUFG. Companies' next step is to examine each business to see how it is contributing to the overall organization, he said. Increasingly that push is being driven by activist investors, especially in companies they perceive to be undervalued or less competitive that could be a better fit with other buyers. As companies grow by acquisition, or are pressured by activist shareholders, they may look to hive off some non-core businesses and reinvest the sale proceeds, a senior banker said. "Activists are agitating for some of the big multi-vertical conglomerates to clarify their strategy," another senior banker said, adding, "we think there's going to be a fair amount of activity around spinoffs and divestitures."

A #MeToo Tale of Two Corporate Boards
" Bloomberg View (02/07/18) Nocera, Joe"

Steve Wynn and Laurent Potdevin are the first two chief executives of publicly traded companies to face accusations under the #MeToo umbrella since the Harvey Weinstein scandal last October. Lululemon Athletica (LULU) quickly tossed Potdevin, while Wynn's alleged sexual misconduct goes back decades. An important reason why Lululemon quickly moved on from Potdevin is the make-up of its board. The average age of the company's nine-person board is 52; it includes four women; and a large outside shareholder, Advent International, holds two seats. At Wynn Resorts, the average age of the directors is 70 years old, half have been on the board for a decade-plus, and some look more like longtime friends or associates than directors with real independence from Wynn. Moreover, Wynn was the founder of Wynn Resorts (WYNN), and his dual role of chairman and CEO made it hard for the board to properly perform its oversight role. Wynn is its largest shareholder, with nearly 12% of the stock, and combined with the 9.35% his ex-wife owns—which he currently controls—21% of the stock is under his control. Lululemon's board understood that Potdevin was replaceable, but Wynn Resorts' board seemed terrified of losing its founder and guiding light even as regulators zeroed in on the allegations on two continents.

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