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13D Monitor Real-time Activist Newsfeed


Carl Icahn has built a position in Bristol-Myers Squibb Co. (BMY), spurring speculation that the drugmaker could soon go up for sale. The news came mere hours after Bristol-Myers confirmed that it would add three directors to its board and buy back $2 billion in stock in a deal with Jana Partners LLC. Icahn, who has a track record of successfully pushing for deals among pharmaceutical companies, reportedly sees a valuable drug portfolio that could attract a takeover. Bristol-Myers spearheaded the development of so-called immunotherapies, and it dominates the niche. Competitors have been trying to close ground with Bristol-Myers, since analysts estimate the treatments could be worth $20 billion in annual sales. The company has been struggling since announcing unimpressive results of an important clinical study for its lung-cancer immunotherapy Opdivo in August. That was followed by a delay in the anticipated approval of the treatment and lowered earnings forecasts for Bristol-Myers. Jana, which began amassing a stake last year, reportedly began pressing for board changes to improve management oversight after Bristol-Myers in January backed down from plans to seek a faster approval process for Opdivo. A sale of Bristol-Myers is not guaranteed; it is unclear if the company is willing to sell, and few companies could afford to buy it. Even for Icahn, a company with a market value of more than $90 billion is big: Bristol-Myers would be the second-largest company he has ever publicly engaged after Apple Inc. (AAPL), according to FactSet.

Starboard Value LP has taken a 6.6% ownership interest in Tribune Media Co. (TRCO). Tribune announced late last year that it was working with its financial advisory team on a strategic review of its assets. The company, one of the biggest U.S. television station operators, had hired investment banks Moelis & Co. and Guggenheim Securities as financial advisers earlier in 2016. Tribune sold Gracenote, its media data unit, to Nielsen Holdings PLC for $560 million in December. Starboard's stake makes it Tribune's seventh-largest shareholder, according to Thomson Reuters data.

ABB Ltd. announced Wednesday that Cevian co-founder Lars Forberg has been nominated for a seat on the board. Cevian, which owns a roughly 6% stake, has been pushing for a breakup of the Swiss industrial company, arguing it is overly complex and difficult to run. In a separate statement, ABB revealed that it uncovered embezzlement at its South Korean subsidiary after the alleged culprit disappeared earlier this month. A local treasurer is believed to have forged documents and colluded with third parties in a "sophisticated criminal scheme," ABB said. The suspected theft will lead to a pre-tax charge of about $100 million on last year's results, ABB said. The fraud is the second such disclosure this month after the company said it is under scrutiny by the U.K. Serious Fraud Office following the discovery of improper payments related to another criminal investigation. The cases add to the pressure facing ABB from its second-largest shareholder, Cevian, which has been pushing for a spinoff of the power grids business. In October, CEO Ulrich Spiesshofer rebuffed the investor and announced ABB would keep the business. Cevian's other co-founder, Christer Gardell, has since pledged to continue pushing ABB for a breakup.

The board of CSX Corp. (CSX) has called a special shareholders meeting to discuss Mantle Ridge LP's demands for changes at the company, which include installing railroad veteran Hunter Harrison as CEO. CSX said the meeting, which has not yet been scheduled, will let shareholders vote on Harrison's $300 million-plus proposed pay package. Shareholders will also be able to vote on Mantle Ridge's bid for six seats on the board, with Paul Hilal as chairman. "We are pleased that CSX agrees that change is needed," Mantle Ridge said in a statement. The hedge fund said it has been in constructive talks with CSX's board for weeks. CSX said Tuesday that Mantle Ridge owns less than 5% of the company's stock.

Crown Ocean Capital (COC), which now owns 16.23% of Edinburgh-based Bowleven, is seeking to remove six members of the company's board and install Chris Ashworth and Eli Chahin. On Wednesday, Crown's candidates vowed to act in the interest of Bowleven and its shareholders and warned they were ready to take additional action against the company if its board makes suggestions "to the contrary." Shareholders will vote on COC's proposals at a general meeting slated for March 14.

Immunomedics Inc. (IMMU) has filed a federal lawsuit and a motion seeking injunctive relief against venBio Select Advisor LLC and venBio's four director candidates. The lawsuit is related to allegations of venBio's continuing material violations of federal securities laws in connection with Immunomedics' upcoming 2016 Annual Meeting of Stockholders, scheduled for March 3. The company accuses venBio of violating and continuing to violate federal securities laws and proxy rules by intentionally delaying the filing of its Schedule 13D in respect of its greater than 5% ownership of the company by over five months in order to conceal its intent to try to take control of the company's board; failing to disclose all of the members of its Schedule 13D and proxy soliciting group who, together with venBio, hold as much as 19% of the company's stock; making false and misleading statements about Immunomedics and its board and management; failing to file solicitation materials in a timely manner with the U.S. Securities and Exchange Commission; and unlawfully announcing purported preliminary proxy voting results. The lawsuit seeks to enjoin venBio from further violations and mandate that it make full disclosures promptly to all stockholders in sufficient time prior to the 2016 Annual Meeting.

Macy's Inc. (M) reported profits of $2.02 a share for the fourth quarter of 2016, beating analysts' expectations of $1.96 on average. The increase in earnings comes as the company closes stores and cuts costs in an effort to navigate an industrywide slump and offers hope that the Cincinnati-based company can pull out of the downturn. However, Macy's continues to face pressure from investor Starboard Value LP, and sources say the company has held early-stage talks with rival Hudson's Bay Co. (HBC) about a possible takeover. Meanwhile, Macy's is facing a transition in upper management, as President Jeff Gennette takes over as CEO from Terry Lundgren on March 23. "While 2016 was not the year we expected, we made significant progress on key initiatives that are starting to bear fruit," Lundgren said.

Verizon Communications Inc. (VZ) will acquire Yahoo! Inc.'s (YHOO) Internet properties in a deal valued at $4.48 billion in cash, marking a discount of $350 million following the disclosure of security breaches at Yahoo. Verizon and the entity that remains of Yahoo following the deal, to be renamed Altaba Inc., will share any ongoing legal responsibilities related to the breaches. The revised terms provide a "fair and favorable outcome" for shareholders, said Marni Walden, executive vice president and president of product innovation and new businesses at Verizon. "It provides protections for both sides and delivers a clear path to close the transaction in the second quarter."

Tiffany & Co. (TIF) has reached a deal with Jana Partners LLC to add three new members to its board, including former Bulgari Group chief Francesco Trapani. As part of the deal, Trapani will help oversee the jewelry company's search for a new CEO; and the size of the board will increase from 10 to 13 members. Three other directors will step down in the next two years, however. Jana and Trapani together own about 5.1% of outstanding shares in Tiffany's, which has suffered declining same-store sales for several quarters.

Bristol-Myers Squibb Co. (BMY) announced Tuesday it would add three new board members and accelerate share repurchases, nodding to pressure from Jana Partners LLC. Former senior executives from Bausch & Lomb and Vertex Pharmaceuticals Inc. (VRTX), Robert Bertolini and Matthew Emmens, will join the board effective immediately, along with Theodore Samuels, currently a director at Perrigo Company plc (PRGO) and (STMP). Bristol-Myers said the board appointments reflect communications with Jana. The board will temporarily expand to 14 seats, but only 11 directors will stand for election at the company's annual meeting in May. Jana owned 3.9 million shares in the company late last year, according to a filing last week.

CSX Corp. (CSX) announced Tuesday that Chairman and CEO Michael Ward will retire this May. In addition, Fredrik Eliasson—currently chief sales and marketing officer—will step up as president to replace Clarence Gooden, who also is retiring later this year. The moves come as railroad veteran Hunter Harrison, with backing from hedge fund partner Paul Hilal, seeks to claim the top spot. However, CSX said it has been considering the changes for more than a year, and that the appointment of Eliasson is not meant to "pre-empt or otherwise affect" talks with Harrison. CSX reportedly offered Harrison the position of CEO in private last week, but talks collapsed as Hilal refused to back down from some compensation and governance demands.

Natarajan Chandrasekaran took over as chairman of India's Tata Sons on Tuesday, months after the firm fired predecessor Cyrus Mistry in a contentious boardroom battle. Chandra, as he is better known, said Tata Sons, the holding company of the $100 billion Tata group, will focus on improving shareholder returns and tightening capital allocation rules. He also said he plans to bring the group closer together to take advantage of its collective strength. Chandra has stepped up at a time when several companies in the conglomerate are facing faltering profits. Mistry, engaged in a legal battle with Tata Sons since his removal in October, has warned of big writedowns and called for governance reforms at Tata Sons. The company has denied his allegations. Chandra, the former CEO of IT outsourcing giant Tata Consultancy Services, has also been named chairman of several group operating companies including Tata Motors, TCS, Tata Steel, and Tata Power.

Tata Consultancy Services Ltd. approved a 160 billion rupee ($2.4 billion) share repurchase to boost returns for shareholders. The board of Asia's largest software services provider by market value voted to repurchase as many as 56.1 million shares at 2,850 rupees each at a Feb. 20 meeting in Mumbai. This marks Tata Consultancy Services' first buyback, as cash and investments rose to about 432 billion rupees at the end of December from 277.5 billion rupees a year earlier. After the announcement, the company's shares jumped 3.9% to 2,502.2 rupees, its highest closing price in five months. Earlier this month, pressure from Elliott Management Corp. prompted Cognizant Technology Solutions Corp. (CTSH) to agree to buy back about $3.4 billion of shares. A large cash balance makes the case for large software developers to pursue a consistent share buyback program, as it is a tax-efficient way to return excess cash to shareholders and provides a "good long-term boost" to earnings per share, said Kotak Securities Ltd.

T.V. Mohandas Pai, former CFO of Infosys (INFY), is calling on institutional investors to raise questions about the huge cash pile on the company's books and governance issues. "Capital allocation is very important. Institutional investors should raise those questions. They have a duty ... institutional investors should raise questions on governance because it concerns the company's reputation," Pai said in an interview. At the end of December, Infosys had liquid assets, including cash and cash equivalents, and investments worth Rs 35,697 crore (US$5.25 billion) on its books. He said the company's founders, who hold a 13% stake in the Bengaluru-based company, had raised these questions like any other investor would. "They have every right to question the Board," Pai said. "Since the largest shareholder has sought clarification, they must also seek detailed clarification." Pai and former colleague V. Balakrishnan, had sought a US$1.8 billion buyback in 2014 just as CEO Vishal Sikka was taking over. "We had raised the issue. We hope that other institutional investors will also raise their voice because the institutional investors have an obligation to protect their investment," he said. "All over the world, for listed companies when growth slows down and there is too much cash, shareholders will ask what are they doing with the cash ... about capital allocations. Most Boards around the world will respond with a buyback to show confidence in the company and stabilize the stock price." Infosys recently has come under fire from founders, like N.R. Narayana Murthy, who have publicly raised concerns about alleged corporate governance lapses.

Oasis Management Co. is stepping up the pressure on Panasonic Corp. to improve its offer for PanaHome Corp.  The Hong Kong-based fund will ask the courts to rule on whether the price is fair if shareholders approve the deal on current terms, said Seth Fischer, Oasis's chief investment officer.  Oasis argues the offer undervalues the company by more than 50%, and is demanding a larger share-exchange ratio or for PanaHome to pay out its cash as a special dividend.  Oasis will petition the courts if Panasonic gets the votes it needs to make PanaHome a fully owned subsidiary, Fischer said.  He expects the share-swap proposal, which was announced in December and faces a vote in June, to be approved because Panasonic owns 54% of PanaHome.  Fischer is hoping most minority shareholders will reject the deal, which would boost a case in the courts.  Oasis, PanaHome's second-largest shareholder after Panasonic, launched a website last week to inform other shareholders about the problems with the takeover.  Oasis delivered letters to Panasonic and PanaHome in September about the use of cash, Fischer says; then in December, Panasonic announced it would buy all of PanaHome.  Fischer calls the transaction a test case of whether Japan's corporate governance overhaul is working.

The Securities and Exchange Commission has wrapped up its investigation of CVR Energy Inc. (CVI), the fuel refiner Carl Icahn acquired in a hostile tender offer in 2012, by concluding that CVR failed to give investors enough information about its fee agreement with the two investment banks it hired to help the company fend off Icahn’s takeover. CVR, according to the SEC, should have said in its SEC filings that the banks, Goldman Sachs (GS) and Deutsche Bank (DB), would be due a lavish success fee even if Icahn won control of the company. If the decision holds up, CVR’s lawyer, longtime Icahn counsel Herbert Beigel, intends to argue the state court decision requires the restoration of CVR’s federal court suit as well. In that case, CVR amended its complaint in 2015 to accuse Wachtell of giving CVR bad advice on its SEC disclosures during the takeover battle.

Sevcon (SEV) announced last week that it won a battle against its shareholder, San Francisco-based Meson Capital, for control of the board. In July 2016, Meson Capital increased its stake in Sevcon to 19%, and the company appointed Meson CEO Ryan Morris as its executive chairman in August. However, Sevcon replaced Morris with an independent director on Dec. 9, saying Morris would stay on as a director. On Dec. 21 Meson announced a proposal to declassify Sevcon's board, which would make it possible to replace many of its directors. Meson also nominated six candidates for election to Sevcon's board at the 2017 annual meeting. Sevcon announced last week that it had defeated Meson at its Feb. 7 annual meeting. Since the proposal failed, Sevcon's board remains unchanged, and Morris will stay on the board until the company's 2018 annual meeting.

German drugmaker Stada has received a new takeover approach from buyout group Bain Capital, sources said Friday, valued at 3.6 billion euros ($3.8 billion). The entrance of a third bidder comes after Stada revealed late Thursday a proposed price of 58 euros per share from an unnamed suitor. Stada's supervisory board hastily arranged a meeting for Friday, a source said, where they are likely to discuss the bidding process. The company announced earlier this week that buyout group Cinven had offered 56 euros per share, valuing it at about 100 million euros less than the latest offer. Advent International also surfaced as the second prospective bidder; the private equity firm is expected to submit a bid next week. Stada shares gained 1.9% to 57.29 euros at 1250 GMT, headed to close at a record high, having risen 15% so far this week. Active Ownership Capital (AOC) acquired a roughly 7% stake in shares and options before May last year when the shares were trading at about 30 euros each. At the time, the investor called for a management shakeup, seeking non-executive directors with more international experience.

Whole Foods Market Inc.'s (WFM) annual shareholders meeting will convene Friday amid investor discontent about declines in sales growth and reductions in its share value.  Some shareholders say the company needs to boost its performance in the increasingly competitive grocery industry, or potentially face a challenge to the board in about six months, according to sources.  Protest votes against directors without a competing slate of nominees are unlikely to remove current board members but can encourage activists to try to campaign next year, especially if performance has not improved.  Some shareholders believe the company has a long way to go to turn around its bottom line and expect pressure on leadership to grow.  Neuberger Berman, a top-10 investor with a roughly 2.4% stake, has been privately pushing for faster change at the company, sources said.  It reportedly believes Whole Foods resonates better with millennials and sells more prepared foods than rivals, but that management has not kept up with the chain's growth.  Proxy advisers, meanwhile, are adding to the pressure with concerns about Whole Foods' board attendance, executive compensation, and the closeness of its board, reports Glass Lewis & Co.

Ashford Hospitality Prime Inc. (AHP) struck a settlement deal with Sessa Capital on Thursday, ending a nearly year-long feud.  Last spring, Sessa launched a proxy fight at the real estate investment trust, nominating five directors to its board.  A legal issue arose that caused Sessa to bring a lawsuit against the company, which it ultimately lost; as a result, the hedge fund was unable to put its directors up for a shareholder vote.  Other Ashford Prime shareholders, however, demonstrated their frustration with the board.  The company said after the annual meeting last June that "withheld" votes exceeded the "for" votes for each of its director nominees.  Sessa reportedly prepared to launch another proxy contest this year, but the two sides began talks last month to avoid further infighting.  According to the settlement, two of Sessa's previous director nominees will be appointed to Ashford Prime's board.  The deal also allows the REIT and the hedge fund to jointly select an additional director. Two current directors will step down.  The two sides have also come to a two-year truce, agreeing to dismiss all pending litigation and to various provisions until before its 2019 annual meeting.

Paul Hilal wrote to the board of CSX Corp. (CSX) on Thursday, expressing his willingness to compromise on certain leadership demands as long as Hunter Harrison is granted a four-year contract as CEO.  The letter comes two days after CSX called for a special shareholder meeting next month to vote on the demands Hilal spelled out in private negotiations.  His fund, Mantle Ridge LP, owns roughly 4.9% of CSX stock.  The U.S. railroad operator on Tuesday estimated Harrison's proposed pay package at $300 million and said Mantle Ridge was seeking considerable representation on the company's board.  On Thursday, Mantle Ridge countered that it was only seeking director seats for Hilal and Harrison and that the other four candidates were independent professionals from a list vetted by a CSX board member.  Hilal insisted CSX overstated Harrison's compensation figure and said his major concern is that the board was only willing to consider Harrison for a two-year deal as CEO.  Hilal said he would consider removing one independent director candidate from his proposal if CSX's board could promise Harrison a four-year stint.  CSX said Thursday that its board would review Mantle Ridge's letter.

Yum! Brands Inc. (YUM) said Thursday that Keith Meister, managing partner of Corvex Management LP, will be stepping down from his director post immediately.  Meister joined the board after successfully campaigning for the Louisville, Kentucky-based fast-food giant to spin off its Chinese operations in mid-2015.  He argued that the business would deliver greater value for shareholders as an independent entity.  The plan materialized last October, when Yum China Holdings Inc. became a separate business.  "With the China spinoff successfully executed, and Yum's capital structure, management team, and transformation plans in place, the company is set up for great success," Meister said in a statement Thursday.  As of the end of 2016, Corvex owned a 5.7% stake in Yum and a 3.8% interest in Yum China, according to Bloomberg data.

The Alliance Trust Shareholder Action Group (ATSAG) is asking shareholders to vote in favor of all resolutions at the trust's general meeting on Feb. 28 despite opposition from two institutional advisory groups, which have recommended abstaining on some of the proposals.  Multiple proposals will be made centering on the change of investment approach that was outlined in December 2016 and a proposed repurchase of all the shares held by Elliott Advisors, which was announced in January.  Elliott has more than a 20% stake.  The institutional advisory services are concerned about a potential conflict of interest, because consultant Willis Towers Watson was hired to give advice on the future direction of the trust but was then appointed to supervise the multi-manager structure.  They are also concerned that Elliott is getting an overly generous exit price.  The exit offer of 4.75% to net asset value is only slightly narrower than the current discount of 4.9%.  ATSAG says a repurchase of Elliott shares would help fend off future pressure from the investor.

Richard Bernstein, head of the Crystal Amber fund, has voiced doubt about Ashley Highfield's leadership of Johnston Press.  The investor's comments are its first public rebuke of the newspaper group's CEO since becoming its biggest shareholder, with a more than 21% interest.  Earlier this month, Highfield said that he and the company's CFO would arrange a meeting with Crystal Amber shortly.  However, Bernstein says Highfield has not met with the fund or offered a meeting.  "We're most concerned that there must be no repeat of the negotiations in 2014, which Ashley oversaw and was 'rewarded' by his board with a substantial bonus," Bernstein said.  "…We have neither the evidence nor the confidence in his ability to secure a better outcome for shareholders in the forthcoming inevitable restructure in 2019."  Johnston Press' share price is down more than 50% in the last 12 months, following a difficult year for newspaper publishers.

On Feb. 16, hedge fund operator TCI Fund Management said it had garnered the support of several other investment firms in its protest against Safran's agreed bid for Zodiac Aerospace. "We have received support from several American and European funds. But we are not looking to act in concert with them," said TCI partner Jonathan Amouyal. "We are in contact with a lot of shareholders. There aren't that many who disagree with us." TCI recently wrote to France's AMF market regulator to protest the $9 billion Safran-Zodiac deal, arguing that Safran is paying too much for Zodiac and that minority shareholders should have more information on the deal and more room to express their views on it. The deal has been agreed upon by the two companies and has the backing of several major investors in both groups. The French government also has backed the deal, with France owning around 14% of Safran. Safran management and other employees hold around 12% of Safran's share capital, while the French state and Safran employees together account for around 40% of the voting rights of Safran shareholders. TCI Fund owns about 3.87% of Safran's capital.

Lion Point Capital, a small hedge fund founded by Didric Cederholm, a protégé of Elliott Management's Paul Singer, is encouraging one of Singer's targets to listen to him. Earlier this year, Elliott called for Arconic (ARNC) Chairman Klaus Kleinfeld to be replaced and to nominate five board members. Lion Point, which had a 0.22% stake in Arconic at the end of last year, is voicing support for Elliott's push. "Lion Point believes that the intrinsic value of Arconic materially exceeds the Company's current stock price, and we welcome and support Elliott Management Corporation's plan to unlock this value," Cederholm and head of research Jim Freeman wrote in a Feb. 15 letter to Arconic's board. They recommended that the Arconic board "promptly engage with Elliott in discussions to implement a plan to enhance shareholder value." Earlier this month, First Pacific Advisors, one of Arconic's largest shareholders, also announced its support for Elliott.

Following pressure from Caerus Investors, Kate Spade & Co. (KATE) announced it would explore strategic alternatives.  Caerus has urged the company to explore a sale, saying it would make a "great acquisition target" —leading to reports that companies such as Michael Kors Holdings Ltd. (KORS) and Coach Inc. (COH) could seek to acquire the handbag and accessories maker. Kate Spade said it will explore strategic alternatives with Perella Weinberg Partners as its financial adviser.  Shares of the company shot up more than 10% to $21.75 in premarket trading on Thursday.

VenBio Select Advisor has filed an injunction to prevent Immunomedics (IMMU) from closing a deal that would give Seattle Genetics (SGEN) global rights to Immunomedics' cancer drug candidate IMMU-132. VenBio also wants to prevent further delays of an upcoming shareholder vote at the company's annual meeting. Immunomedics' largest shareholder is accusing the company's directors and management of undervaluing IMMU-132, which it calls the company's "crown jewel," in an attempt to retain shareholder support ahead of the upcoming vote. However, in a letter to shareholders, Immunomedics said, "This lawsuit appears to be a desperate act designed to prop up VenBio's attempt to take control of Immunomedics and implement its own self-serving agenda, at the expense of other stockholders." VenBio said that more than half of the 80% of Immunomedics outstanding shares already submitted for the vote are in favor of VenBio's board nominees, and with the vote now scheduled to take place after the deal with Seattle Genetics would close, any newly elected board nominees would not have a chance to review the terms of the deal. "We believe the deal Immunomedics' current Board and management announced only four business days before the Annual Meeting vote was motivated by a desire to entrench themselves and rush to announce an agreement before they lost the vote and their Board seats," said Behzad Aghazadeh, managing partner and portfolio manager at VenBio.

Hunter Harrison is frustrated that negotiations fell through between his partner Paul Hilal and directors of CSX Corp. (CSX), where he sought the head role, according to an interview with The Wall Street Journal.  "I wish the two sides would get together and allow for this value creation for the shareholders instead of going through these games which create nothing but further anxiety for the shareholders," Harrison said.  He added that while he is "disappointed" that Hilal could not reach an agreement with CSX in their talks over the last month, "I am not trying to abandon anyone."  Hilal of Mantle Ridge LP is seeking to add six directors to a 12-member board, and has also asked the railroad to approve a compensation plan for Harrison that CSX estimated could cost $300 million.  CSX said its board has concerns about giving so many board seats to a shareholder with less than a 5% stake and that the cost of the proposed compensation package is extraordinary.  Roughly 50 CSX investors met with Hilal at a Manhattan restaurant Wednesday night, where he reportedly defended his need for six board seats so that the expected new CSX chief can successfully execute his plan.  CSX, meanwhile, took the rare step Tuesday of calling for a special shareholder vote on Mantle Ridge's demands.

The United Kingdom's Financial Reporting Council (FRC) currently has the authority to fine and ban only boardroom directors who are members of professional bodies when they break financial reporting rules. However, under proposals being submitted to the government, the FRC said it will undertake a "fundamental review" of the U.K. corporate governance code and issue a consultation in the summer. The code is voluntary and used by shareholders to hold companies to account. Under the proposals, boardroom directors would face tougher punishments when they violate financial reporting rules. FRC Chairman Sir Win Bischoff said, "The prime minister has a vision of an economy that, in her words, 'works for everyone'. This needs U.K. businesses to thrive so that all stakeholders including workers, customers, suppliers, and society itself benefit through jobs growth and prosperity."

The U.S. Securities and Exchange Commission (SEC) recently settled enforcement actions involving violations of beneficial reporting requirements under Section 13(d) of the Securities Exchange Act. In one action, certain shareholder activists and their affiliates failed to properly disclose beneficial ownership information during a series of campaigns to influence or exert control over certain microcap companies. Without admitting or denying the findings, the activist group consented to the SEC's order and agreed to penalties ranging from $30,000 to $180,000. The announcement of the settlements is a clear sign that the SEC is taking a closer look at Section 13(d) reporting in the context of proxy battles where omission of information about the parties involved could have a significant result, writes Bryan Pitko of Stinson Leonard Street. The recent cases "should serve as a warning to all participants in proxy fights that they need to actively comply with all beneficial ownership reporting requirements," concludes Pitko.

Arconic Inc. (ARNC) confirms that it has sold nearly two-thirds of its 20% ownership interest in Alcoa Corp. The deal gives the manufacturer of aerospace components a cash infusion as it battles disgruntled shareholders jockeying for board seats. Arconic plans to use the almost $900 million from the sale of more than 23 million Alcoa shares to pay off debt or buy Arconic shares. The moves are expected to help Arconic improve profits by bolstering its balance sheet and shoring up its stock price with buybacks at a time when activist investors led by Elliott Management Corp. pursue a boardroom shake-up that includes bids for five board seats and replacing Chairman and Chief Executive Klaus Kleinfeld. Elliott says Arconic's stock has been restrained by Kleinfield’s inability to cut expenses and increase margins for Arconic's business lines in automotive and aerospace components.

The board of Edinburgh-based oil and gas company Bowleven has unanimously urged shareholders to vote against all resolutions proposed by Crown Ocean Capital P1 at a general meeting next month.  In a statement to the stock market, AIM-listed Bowleven argued that Crown Ocean had not offered a “credible strategy” to unlock long-term value for Bowleven's assets and that the company would be badly hurt if shareholders supported the removal of the majority of its board.  Crown Ocean, whose 16% interest makes it the single largest shareholder in Bowleven, responded by saying the board had “once more failed to own up to the fundamental issues” shareholders have raised.  It blasted the board for overseeing a “catastrophic financial performance” in the last 10 years and criticized Bowleven for lacking a strategy to maximize shareholder value.  Crown Ocean has called for a boardroom shakeup that would include the exit of all directors except for one.

Germany's corporate governance code is being amended to emphasize that institutional investors have a responsibility to exercise their ownership rights. The amendments come after the conclusion of a consultation period that generated a strong response, both positive and critical. A government-appointed commission decided on changes to the code itself and the preamble, which delineates the spirit behind the code. Indeed, the preamble has been extended to assert that good corporate governance requires firms and their board members to conduct business ethically and take responsibility for their behavior. Manfred Gertz, the outgoing chairman of the commission, says the responses to the consultation period highlight "the vast interest on questions regarding good corporate governance that exists within German listed companies. The focus is on strengthening self-responsible conduct by corporate bodies and committees complimented by a sensible level of transparency, allowing stakeholders to better assess how corporate governance is being put into practice."

On Feb. 15, Voce Capital Management LLC nominated four candidates, including its founder and managing partner, for election to Air Methods Corp.'s (AIRM) board in an effort to turn around the medical helicopter company. The hedge fund—which has a 3.1% stake in the company—has long pushed for Air Methods to sell itself. Voce backed off a threat to start a proxy war in March 2016 after the company agreed to board changes and to address shareholder concerns, but it reiterated its call for a proxy war on Jan. 30. Although Air Methods has added one Voce nominee to its board, the hedge fund says the company has not fulfilled its obligation to amend its bylaws so all directors could be elected annually. "The situation at Air Methods has unraveled since we entered the cooperation agreement with the board almost a year ago," Voce said.

Crown Ocean Capital (COC) has called for a general meeting on March 14 to oust six of Bowleven's directors from the board, including CEO Kevin Hart, and appoint two directors of its choosing. COC also wants the Edinburgh-based oil exploration firm to cease investment in the Bomono license, onshore Cameroon, contending that it has failed to show any "convincing economic prospects." Bowleven officials accuse COC of attempting to turn the firm into a holding company with the intention of stripping cash from its balance sheet, and it is pleading with shareholders to vote against the resolutions proposed by the Monaco-based offshore private investment vehicle, which holds 15.56% of Bowleven. According to Bowleven Chairman Billy Allan, "After full consideration, the board has concluded that Crown Ocean's proposal is without merit. Their approach lacks any strategy to maximize the value of Bowleven's assets and disregards the vital need for a board to serve all shareholders. Crown Ocean proposes a board structure that is entirely self-serving and a model of bad governance."

Gamco Investors Inc. (GBL) is the latest investor to oppose French dairy giant Lactalis Group's bid to purchase Italy's Parmalat SpA. Lactalis launched its initial takeover offer for the whole company six years ago, causing turbulence in Europe as Italy sought to prevent the loss of a national champion to foreign buyers. Since then, Lactalis has increased its 83.3% stake to 87.7%. Gamco argues that the current offer to buy out remaining minority shareholders is too low, echoing concerns from Amber Capital LLP, the most vocal critic of the offer. In December, Lactalis announced a voluntary tender offer to buy out minority shareholders for €636.7 million, or €2.80 a share. Yet Parmalat's stock was at €2.98 on the Milan Stock Exchange on Wednesday morning, signaling Lactalis' bid could fail unless it is raised. The tender offer expires March 10. "We're 99% sure we are not tendering our shares" held in the firm's merger arbitrage mutual funds, said Gian Maria Magrini, who helps oversee the holding at Gamco. The U.S. money manager owns roughly 1% of total Parmalat shares outstanding, making Gamco the second-largest minority shareholder after Amber Capital. "We would like to see the tender offer increased substantially," added Arturo Albano, a corporate governance specialist at Amber Capital. The London-based money manager owns more than 3% of Parmalat stock, Albano said.

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Amber Warning – the Investor Whose Interest Signals Danger
" (02/19/17) Martin, Ben"

Crystal Amber is one of Britain's most feared investment funds. Run by Richard Bernstein, Crystal Amber has a record of spurring seismic changes at the small and mid-cap companies where it builds stakes, and many of its targets eventually are taken over. "The correlation between companies we invest in which are subsequently taken over is very high," says Bernstein. "One of my shareholders has said to me, 'Richard, you're not really a fund manager, you're a businessman,' and I look at businesses as the same way as a businessman does. I look at our portfolio now and I can see why a lot of these businesses are attractive." Bernstein notes that he does not pursue the type of aggressive activist campaigns favored by U.S. funds, including Elliott Management and Bill Ackman's Pershing Square, which are not averse to publicly criticising companies where they hold stakes. "We're not the U.S. brand of activism. Our default position is not to be antagonistic towards management teams. In nine years of our existence we've called one EGM and that was a company where most of the board resigned that morning after we called it," Bernstein says. "Our style is contrarian, patient, supportive. But when management teams are deliberately obstructive and acting in their own interest rather than the stakeholders, then that is unacceptable and we act." Bernstein currently is focused on the troubled newspaper publisher Johnston Press, which is struggling with £137.7 million of net debts. He has publicly questioned whether Johnston Press CEO Ashley Highfield is the right man to lead the company through what investors believe is an inevitable restructuring.

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Bass Pro Shops' Acquisition of Cabela's Now Looking Shaky
" CNBC (02/19/17) Manessis, George; Picker, Leslie"

Some in the hedge fund community appear to be growing pessimistic about Bass Pro Shops' $5.5 billion acquisition of Cabela's (CAB), after road bumps emerged surrounding the deal.  Hedge funds that bet on merger-arbitrage are trading the deal at prices that would suggest a 40% chance of it going through.  One setback is the antitrust situation.  Many outdoor retailers stocked up on guns, assuming that Hillary Clinton would become president in November.  But with President Donald Trump's surprise victory, consumers have not been buying guns as much as retailers expected.  That has damaged revenue numbers, with Cabela's showing a 4.9% decline in its fourth-quarter earnings Thursday.  Along with Cabela's agreement to sell its retail business to Bass Pro Shops is its deal with Capital One (COF), which acquired Cabela's credit-card business.  That deal depends on the Office of the Comptroller of the Currency, which has not yet agreed to grant approval due to a separate issue with Capital One.  Elliott Management, which had pushed for a sale of the company, showed in a filing Tuesday that it had sold its 6.3 million shares in Cabela's during the fourth quarter.  That would have been before the stock spiraled in early January.  On Friday, the stock was trading around $45 a share, below the $65.50 per share in cash that Bass Pro Shops offered to pay in October 2016.  Analysts say if no deal is reached, Cabela's could fall even further below its pre-deal price.

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Will Nelson Peltz Break Up P&G?
" Fortune (02/18/17) Tully, Shawn"

Observers are speculating whether or not Nelson Peltz will seek to further reinvent Procter & Gamble (PG) by demanding the breakup of the world's consumer-goods colossus. On Feb. 14, press reports revealed that Trian had taken a $3.5 billion stake in P&G, the largest investment in its history. P&G's stock jumped 3.4% on the news. However, its longer-term performance is underwhelming. Since the start of 2014, P&G shares have risen just 16%, half the increase in the S&P 500. P&G suffers from weak growth and declining profitability. Peltz has not commented on his plans for P&G. Analysts say Peltz may argue that splitting P&G into separate businesses, each specializing in a single category, could be the key to unlocking value. Others note Peltz may well decide to endorse P&G's current course, simply improving its prospects with his formidable guidance.

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How Peltz Can Turn P&G's Tide
" Bloomberg (02/15/17) Banjo, Shelly"

Nelson Peltz, whose Trian Fund Management LP has acquired a holding of more than $3 billion in The Procter & Gamble Co. (PG), should be able to help revitalize the company.  Trian does not appear to have held talks with the company yet, but P&G said it "welcomed the investment."  P&G's shares have been stagnant the past two years; and as the company sold off more than 100 brands to focus on 10 core categories, it has seen a fifth of its annual sales evaporate since 2012.  CEO David Taylor has successfully removed less successful brands such as Covergirl and Duracell and slashed costs—but he has not been able to push the company far enough, fast enough.  Peltz is a natural deal-maker and should have a positive impact.  The company is long overdue for acquisitions that could help jump-start its growth; it has not bought a company since 2012, and its last mega-deal was a $57 billion acquisition of Gillette in 2005.  Peltz also might encourage P&G to break up, separating its household-products business from its personal-care unit.

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Shareholders Seeking Books and Records Must Demonstrate Credible Basis to Infer Wrongdoing
" JDSupra (02/14/17) Fine, Adam; Hefter, Michael; Philp, Ryan"

In a case involving Tesla Motors Inc. (TSLA), the Delaware Court of Chancery recently reaffirmed that shareholders seeking to inspect the books and records of Delaware corporations must demonstrate a credible basis to infer corporate wrongdoing, because accusations based on mere "suspicion and curiosity" are insufficient. Under Section 220 of the Delaware General Corporation Law, shareholders of a Delaware corporation can, in certain circumstances, gain access to records after demonstrating, by a preponderance of the evidence, that there is a credible basis to infer mismanagement or wrongdoing by the corporation's agents. The court stressed that the credible basis test strikes "an appropriate balance between encouraging productive Section 220 actions where there is a reasonable likelihood of wrongdoing while preventing inspections without a factual basis from draining corporate resources." The decision emphasizes the Court of Chancery's gatekeeping function in assessing Section 220 records requests based on alleged corporate wrongdoing. Although shareholders "need not actually prove the wrongdoing itself by a preponderance of the evidence," they must show "a credible basis from which the Court of Chancery can infer there is possible mismanagement that would warrant further investigation." The decision offers corporate defendants a powerful tool in resisting records requests that amount to what the court calls "fishing expedition[s]."

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FTI Consulting's Global Shareholder Activism Map Illustrates the Growth of Activist Investing Across the World
" Mondo Visione (02/15/17)"

In a recently published update to its interactive Global Shareholder Activism Map, FTI Consulting Inc. (FCN) reveals that shareholder activism gained momentum and geographic breadth in the last year. FTI's analysis shows that 342 activism campaigns occurred outside the United States in 2010, compared with 70 in 2010. According to the research, the highest risk for an increase in activism outside the United States was seen in Canada, Australia, and the United Kingdom, which have experienced changing economic factors, including increased global scrutiny of corporate governance standards. Meanwhile, landmark shareholder activism campaigns were seen in South Korea and Japan. "The success of shareholder activism in North America continues to fuel its spread across the globe," said Steven Balet, a managing director and head of corporate governance and activist engagement at FTI Consulting. "These global shareholder activists are not necessarily U.S.-based nor do they necessarily conduct their activism in the U.S. style. They have, however, been increasingly successful in many jurisdictions across Europe, the U.K., and Asia."

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