Voce Capital Announces the Election of Its Nominees to Natus' Board
" Business Wire (06/22/18)"
Voce Capital Management LLC announced Friday that a preliminary report by its proxy solicitor shows it has received enough votes to elect its two nominees to the board of Natus Medical Incorporated (BABY) by an "overwhelming margin." The investor, which owns roughly 2.2% of the company's stock, had nominated Lisa Wipperman Heine and Joshua H. Levine to fill the two open seats at the company's 2018 annual meeting Friday morning. "Based on preliminary voting totals tabulated by Voce's proxy solicitor, Voce believes that it has received enough votes to elect its nominees, Ms. Heine and Mr. Levine, to the Natus Board. Ms. Heine and Mr. Levine received nearly 70% of the shares voted in the election, or more than four times as many votes at the Company's nominees," the investor stated. "Taken together, these election results convey a strong and powerful mandate for change at Natus. Stockholders clearly expressed their dissatisfaction with the status quo and the message sent to the Board by stockholders is unmistakable." Voce noted that its effort to remove Chairman Robert Gunst appeared unsuccessful; however, more shares were voted to remove him than were voted in favor of either of the company's director candidates. "We believe this is a strong indicator of current stockholder sentiment when it comes to the leadership of the Board, suggesting to us that had the Company not had a staggered Board ... he might well have been defeated," it said.
Energy Investor Folds Activist Campaign But Nearly Doubles its Money
" Wall Street Journal (06/22/18) Dezember, Ryan"
Kimmeridge Energy Management Co. sold its shares in Houston oil producer Carrizo Oil & Gas Inc. (CRZO) this week after ending a campaign to change the company’s strategy, according to sources. Selling its 8.1% stake reportedly netted the private-equity firm almost a $90 million profit. Kimmeridge had pressed Carrizo to sell its South Texas drilling fields and focus instead on those in West Texas, or merge with a rival. But the investor sold its stake in Carrizo this week after the company's CEO went on TV to praise its strategy of drilling in both West and South Texas, sources said. Carrizo CEO Chip Johnson appeared on CNBC's “Mad Money” with host Jim Cramer on Tuesday to discuss the benefits of its dual-drilling-basin strategy. Johnson said that although Permian barrels were selling for as much as $12 below the main U.S. benchmark, West Texas Intermediate, those produced in the Eagle Ford are selling for about $8 above it. “We're shifting rigs and (hydraulic-fracturing) crews there as fast as we can,” Johnson said on the program, which is popular with investors. Cramer called the move “the pivot of the year.” Kimmeridge had been urging Carrizo's management to sell its Eagle Ford acreage while the price was high, but interpreted from the comments on Tuesday that the company would be unwilling to do so, the sources said.
Telecom Italia CEO Under Fire After Bashing Directors
" Bloomberg (06/21/18) Ebhardt, Tommaso; Lepido, Daniele"
Telecom Italia CEO Amos Genish is expected to face pressure at the June 25 board meeting after he criticized unidentified directors for feeding "untrue and unreliable speculation," according to sources. The CEO, who was installed by the company’s largest shareholder Vivendi SA in 2017, will be asked to explain his comments made to reporters on Wednesday, said the sources. Genish’s job could be at risk if he doesn’t address the concerns of some board members, they said. Some Italian newspapers in recent days have published reports highlighting criticisms of Genish's management style and Telecom Italia's performance under his leadership from unidentified people at the company. The carrier's shares have fallen about 16% since Genish was appointed CEO on Sept. 28. Genish's comments renewed investors' concern about the future of the former Italian telecom monopoly which has been at the center of a shareholder tussle since Elliott Management Corp. acquired a 24% stake and wrestled board control from Vivendi in May. Elliott named 10 members of the board, leaving five seats for Vivendi. Genish, who was on Vivendi's slate, also won Elliott's backing to remain as CEO. Vivendi is considering calling a special investor meeting in a bid to win back control of Telecom Italia's board, sources said Wednesday.
Xerox Judge Rejects Fujifilm Bid to Dissolve Deal Injunction
" Bloomberg (06/21/18) Smythe, Christie"
In a blow to Fujifilm Holdings Corp., a Manhattan state judge has declined to dissolve an order barring its planned merger with Xerox Corp. (XRX). The company has claimed in a separate lawsuit it will suffer $1 billion in damages if it cannot secure the $6.1 billion takeover, which was foiled by Carl Icahn and Darwin Deason. Deason sued Xerox in February in Manhattan state court to block the acquisition, accusing its former CEO Jeff Jacobson of acting inappropriately to reach a deal that saved his job at shareholders' expense. Fujifilm continues to believe a deal between Xerox and its existing joint venture is the best solution, while Icahn and Deason are weighing options to attract higher bids. Manhattan Supreme Court Justice Barry Ostrager issued an injunction in April preventing Fujifilm's takeover of Xerox from moving forward until the lawsuits were settled. Xerox has since ended its plans to pursue the deal as part of an agreement with the investors. Fujifilm appealed Ostrager's ruling in May. This week, Fujifilm also filed a lawsuit in Manhattan federal court claiming damages from the termination of the merger. The company said it did not seek to force Xerox to follow through on the deal in light of the injunction, but expected the order would be dissolved. If the injunction were only left in place for Fujifilm, Xerox and the investors would be free to "attack" the Japanese company, Fujifilm argued, and asked for it to be dissolved.
Index Provider MSCI Delays Decision on Unequal Voting Rights Stocks
" Reuters (06/21/18) Krauskopf, Lewis; Randewich, Noel"
Stock index provider MSCI, slated to make its decision Thursday on how to treat stocks with unequal voting rights, instead extended its review and expects to make a decision by the end of October. The index provider said it “determined that it is appropriate to give further consideration to the full breadth of views expressed by the investment community before announcing a final conclusion.” MSCI has been weighing a plan to limit the influence within its indexes of stocks that have share structures with unequal voting rights. Such a move could have driven portfolio managers to sell their shares to rebalance their holdings. Uneven voting structures has been a contentious issue in corporate governance lately, especially as several newly listed U.S. technology firms have listed shares that retain lopsided decision-making power with insiders. Last year, S&P Dow Jones Indices started excluding companies with multiple classes of shares from the S&P 500 and other indexes, although it did not apply the rule to existing index components. FTSE Russell made a similar rule last July, requiring new constituents of its indexes to have at least 5% of their voting rights held by public shareholders, while giving a five-year grace period to existing constituents that do not meet the threshold. Opponents to the MSCI proposal include BlackRock Inc. The asset manager said in April that securities regulators should be the ones to set international standards for shareholder voting rights, and said MSCI's proposal could distort markets.
Jonathan Litt Urges Saks' Owner Hudson's Bay to Mimic Macy's
" Bloomberg (06/21/18) Deveau, Scott"
Hudson's Bay is not doing enough to take advantage of its real estate holdings and return value to shareholders, according to investor Jonathan Litt in a letter to the company's shareholders. Litt's Land & Buildings Investment Management, which holds a 6.2% stake in Hudson's Bay, the owner of Saks Fifth Avenue, has been pressing the retailer on the issue for a year. Litt said he may consider nominating directors or calling a special meeting now that his settlement agreement with the Toronto-based department store owner has expired. He praised Macy's, which has used real estate to initiate its turnaround. "One could even reasonably ask whether the most logical course for HBC at this point would be an acquisition by Macy's as opposed to trying to play catch up," said Litt. Hudson's Bay's real estate holdings are worth C$31 a share, almost three times its stock price of about C$11.70, according to Litt. He also said it was too early to evaluate the performance of Helena Foulkes, who was recently appointed as chief executive officer.
Investor Revolt Could Parachute Thomas Into Virgin HQ
" The Australian (06/22/18) Murdoch, Scott; Carter, Bridget"
Observers expect Virgin Australia to face an investor revolt, led by a new shareholder who could take a 5% stake in the airline and start lobbying for major board and management changes. DataRoom says former Virgin executive John Thomas could be put forward as CEO by a new investor with the backing of most of the company's current investors. This speculation comes amid reports that Etihad CFO Mark Powers was in Australia last week to hold meetings ahead of a decision to sell down a chunk of its stock. Among Virgin Australia's investors, Etihad holds nearly 21%, followed by Singapore Airlines (20.03%), China's Nanshan Group (20.02%), HNA Group (19.85%), and Virgin founder Richard Branson (10.02%). Etihad's stake has been in question since the airline indicated that its investment with Virgin was not in line with the strategy put in place by CEO Peter Baumgartner. Observers believe the new investor likely would garner support from the Singapore group, Etihad, and Branson, as they reportedly are seeking changes at the airline.
Thyssenkrupp Workers, Some Investors Give CEO Time for Tata Steel Deal
" Reuters (06/21/18) Steitz, Christoph; Käckenhoff, Tom"
On June 21, Thyssenkrupp workers and a group representing some of its investors offered CEO Heinrich Hiesinger more time to finalize a planned joint venture deal with Tata Steel. Cevian and Elliott are pressuring the steelmaker, which is scrambling to forge a joint venture that will satisfy both employees and shareholders. The companies are now in the final stages of negotiations to merge their European steel assets. Hiesinger promised a deal by the end of June, but the firms currently are seeking to bridge a valuation gap after Thyssenkrupp's European steel business outperformed Tata Steel's. "There are still a number of unresolved issues until a possible signing," said Tekin Nasikkol, chairman of Thyssenkrupp Steel Europe's works council and a member of Thyssenkrupp AG's supervisory board. "We expect all parties to focus on diligence rather than speed in fixing the problems. If Mr. Hiesinger needs more time he can have it as far as I'm concerned." Meanwhile, Thomas Hechtfischer, managing director of investor advisory group DSW, which usually represents 1% of Thyssenkrupp's voting rights at its annual general meeting, said, "You should seal the deal but not without hammering out the main points. But Hiesinger's mantra is 'diligence beats speed'—and that's a good thing."
Sarissa Capital's Alex Denner: 'A Reasonable Level of Profit Is Important to Guarantee the Continuous Distribution of Capital'
" Leaders League (06/20/18) Kadri, Yacine"
Hedge funds are often viewed as short-term investors that are only interested in turning a profit, but Alex Denner, president and founder of Sarissa Capital, takes a more nuanced approach to investing. In an interview with Leaders League, Denner discusses how creation of value can align with the general interest. For example, in the pharmaceutical sector, companies advance the greater good while looking to make a profit, says Denner. He notes that new treatments for cancer and genetic diseases would be impossible without investment. "A reasonable level of profit is important to guarantee the continuous distribution of capital necessary to support the development of innovation in a high risk sector that features multi-annual payments," according to Denner. Pharmaceutical companies devote significant revenue toward financing new research programs that are critical to sustaining their business as well as their ability to offer the best possible treatment to patients, adds Denner. With regard to how far the government should go in regulating businesses so that they act in the interest of the general public, Denner says the role of government is to establish the ground rules for ensuring principal stakeholder interests are taken into consideration. "If the government believes that certain activities are being neglected, such as the development of vaccines, they should call upon the private sector to act within the existing framework," according to Denner.
Telecom Italia Keen to Discuss Fiber-to-the-Home Tie-Up With Open Fiber
" Reuters (06/20/18) Flak, Agnieszka; Jewkes, Stephen"
Telecom Italia (TI) CEO Amos Genish said on June 20 that the company is keen to discuss combining its fiber-to-the-home (FTTH) broadband assets with those of smaller rival Open Fiber. He says there are clear economic benefits of such a tie-up, particularly due to the long time frame for recouping the costs of multi-billion-euro investments to bring ultrafast internet to homes in Italy. "We are more than open...to participate in a dialogue on such a combination," Genish said. According to a source, Telecom Italia has spoken to shareholders of Open Fiber, which is jointly owned by state lender Cassa Depositi e Prestiti (CDP) and state-controlled utility Enel. The next move in any tie-up depends on CDP's new management coming on board. "The ball is in Open Fiber's court, we are willing to sit down with them," the source said. Meanwhile, Open Fiber said it was "open to cooperate with anyone who can add value to its fiber optic investments." Further, Genish said he was committed to Telecom Italia and to its strategy to 2020, dismissing suggestions he could leave early following a reshuffle after Elliott won control of the board from top shareholder Vivendi.
Hedge Funds Post Small Gain in May, Curbed by Turmoil in Europe
" Bloomberg (06/20/18) Manzor, Adam; Pennisi, Brian"
Hedge funds posted a small gain last month as jitters in emerging markets offset a strong showing by activist funds. According to the Bloomberg Hedge Fund Database, funds rose 0.32% in May, marking the second straight yearly gain, down from a 0.78% increase in April. Hedge funds were up 0.39% for the first five months of 2018, compared with a 2% increase in the S&P 500 Index. Activist funds recorded the biggest monthly gain among sub-strategies at 5.97%, following an increase of 2.86% in April. However, the Equity Hedge Emerging Market sub-strategy fell 2.42% as political turmoil in Brazil, Italy, and Turkey spooked investors.
Ackman-Backed Platform Is Discussing Unit Sale With UPL Group
" Bloomberg (06/19/18) Kirchfeld, Aaron; Nair, Dinesh; Baigorri, Manuel"
Platform Specialty Products (PAH) is in exclusive talks on a potential sale of its agricultural pesticides business. Bill Ackman's Pershing Square Capital Management is the biggest stakeholder—at 14%—in the West Palm Beach, Fla.-based company, which said last year that it would separate the crop chemicals business from its industrial chemicals division. At first, Platform considered splitting Arysta LifeScience off into a separate publicly traded company. Platform did not identify a suitor for Arysta, but people close to the situation said it is negotiating with UPL, a chemical producer in India. UPL is said to be backed by sovereign wealth fund Abu Dhabi Investment Authority and other investors. Arysta could be sold for more than $4 billion, including debt. Platform plans to update investors by the time of its second-quarter earnings call, which is likely to be held in early August. The company was also in talks with U.K. investment vehicle Wilmcote Holdings, but the London-based firm has indicated that negotiations have ended.
Deal or No Deal? Thyssenkrupp's CEO Faces Crunch Tata Steel Talks
" Reuters (06/20/18) Steitz, Christoph; Käckenhoff, Tom; Rocha, Euan"
The final details of a European steel joint venture are being worked out by Thyssenkrupp and India's Tata Steel, and the fate of the German firm's CEO, Heinrich Hiesinger, hinges on the deal. The companies, facing a self-imposed June deadline, are looking to alter the terms of the deal to compensate for a valuation gap that has emerged since a preliminary agreement in September. Hiesinger faces pressure from Cevian and Elliott, which together hold about a fifth of Thyssenkrupp's shares. If investors are not satisfied with the final deal, Hiesinger would be urged to step down. Investors are worried that he could sacrifice the best deal to meet the self-imposed deadline, and they see no need to force through a deal. "A few more weeks would not be a problem at this stage," one shareholder said.
What's Next for Embattled Allergan? Depends on Pipeline Performance, Analysts Say
" Fierce Healthcare (06/19/2018) Helfand, Carly"
Allergan (AGN) is under pressure to improve its stock price, and its next moves could depend on how some pipeline products perform in upcoming months, analysts say. According to Credit Suisse’s Vamil Divan, the company could potentially separate Brent Saunders’ dual roles of CEO and chairman—a move sought by shareholders Senator Investment Group and Appaloosa. In a letter earlier this month, the investors also requested boardroom changes, one of which Allergan has already made. “We believe splitting the CEO and Chairman roles makes the most sense given some self-inflicted wounds that have damaged management's credibility,” Divan wrote in a Sunday note to clients. Yet such a move isn't necessarily part of Allergan's plan. "We did not sense that interest is high," RBC Capital Markets' Randall Stanicky wrote Tuesday after a meeting with Saunders. "We heard a message from AGN around continuing to evolve, with deviation from currently communicated strategy unlikely," he said. Divan, meanwhile, believes Allergan's R&D leadership could be shaken up if challenges with key prospects persist. While Allergan remains confident that its pipeline programs are setting it up well for future growth, if it's wrong, the company may need to consider more aggressive action to unlock the value of its assets.
Mellanox, Starboard Settle on New Board Members
" Reuters (06/19/18) Baker, Liana B.; Herbst-Bayliss, Svea"
Mellanox Technologies Ltd. (MLNX) announced Tuesday it has reached a deal with Starboard Value LP to add three new members to its 11-member board. In an unusual move, the chipmaker also said Starboard will be allowed to name a direct representative to the board if the company fails to meet certain performance thresholds. The settlement comes five months after the hedge fund, which owns a 10.5% stake in Mellanox, said it planned to oust all current directors. Mellanox said it will add two directors from Starboard’s proposed nominees including Greg Waters, the CEO of semiconductor company Integrated Device Technology Inc. (IDTI), and Jon Olson, a former CFO at programmable chipmaker Xilinx Inc. (XLNX). The two parties also agreed to add another independent director, Jack Lazar, a former CFO at camera maker GoPro Inc. (GPRO). In January, Starboard took the unusual step of nominating its two co-founders, Jeffrey Smith and Peter Feld, and seven other executives with backgrounds in the semi-conductor industry after blasting Mellanox for being too reserved when announcing its 2018 margin targets. The hedge fund said it would add back two sitting directors for continuity.
Icahn Expected to Speed Push for SandRidge Sale After Board Win
" Bloomberg (06/19/18) Deveau, Scott; Nussbaum, Alex"
Carl Icahn’s win at SandRidge Energy Inc. (SD) on Tuesday means the company could be closer to being broken up or sold off, a move sought by many investors, according to an analyst. Icahn, the shale gas explorer's top shareholder with a 13.6% stake, won five of eight director seats, ending a months-long battle. While the company has already disclosed contacts with potential bidders, Icahn has dubbed those efforts a “sham.” Now, “Icahn’s got the board seats, so it’s going to be ‘let’s go, let’s get this done,’ ” said David Beard, a Coker & Palmer Inc. analyst in New Orleans. “He’s going to push on the accelerator.” The question is how much Icahn can get for a company whose assets are largely seen as lackluster. The hope, according to Beard, is that Icahn may be more willing to consider a complete liquidation than the previous board and more creative in seeking a new deal. Many investors think a breakup is the best option, the analyst said. In a letter to shareholders last week, the investor vowed to run a “fair and timely review” of SandRidge's options with “a commitment to submit the highest and best offer” to a shareholder vote. SandRidge said last week it has been in talks with at least 17 possible bidders, including Icahn, although the investor said he was not “presently” planning to make an offer.
Fujifilm Accuses Icahn, Deason of SEC Disclosure Violations, Icahn Calls Claim ‘Easily Disproven’
" Reuters (06/19/18) Frankel, Alison"
On Monday, Fujifilm filed a $1 billion complaint in Manhattan federal court accusing Xerox (XRX) of violating a deal that would have handed control to the Japanese company. Fujifilm alleges that when the Xerox board voted to terminate the transaction on May 13, it bowed “to the whims of activist investors Carl Icahn and Darwin Deason,” who own 15% of Xerox's shares and now control the Xerox board. Icahn and Deason are not named as defendants, but that did not stop Fujifilm from accusing them of violating securities regulations. The suit contends Icahn and Deason have been acting in concert “for some unknown period of time” to block Fujifilm's takeover. Fujifilm claimed Icahn and Deason failed to comply with the Securities and Exchange Commission's Regulation 13D, which mandates public disclosure of groups that control more than 5 percent of a company's shares. It's an odd strategy: in most cases, the remedy for violations of Regulation 13D is just an updated disclosure to reflect cooperation among a group of investors. More importantly, Fujifilm's allegations about Icahn and Deason are “sloppy” and “filled with basic factual errors that are easily disproven with even a cursory review of the public record,” according to Icahn Enterprises deputy general counsel Louie Pastor. It is unlikely Fujifilm can credibly allege disclosure violations during the time period in which Xerox reached a definitive agreement with Fujifilm and then withdrew from that agreement. Pastor suggested that Fujifilm's motive is just publicity, calling it a bid to “attract headlines.”
Who Wants What in Thyssenkrupp-Tata Steel Venture Talks?
" Reuters (06/18/18) Steitz, Christoph; Käckenhoff, Tom"
Thyssenkrupp’s supervisory board is expected to decide next week whether to create a European steel joint venture with Tata Steel. Final negotiations will revolve around how to value the European assets of the two companies. There are several important stakeholders with the power to influence the complex discussions. Thyssenkrupp CEO Heinrich Hiesinger will try to meet a late-June deadline for a decision on the deal, the center of his restructuring plan for the conglomerate. If talks collapse, he would likely face pressure to resign. He now must find ways to plug a valuation gap that has opened up between the assets that Thyssenkrupp and Tata Steel plan to put into the venture. Another important stakeholder is Elliott, which said last month it saw “significant scope for operational improvement” at Thyssenkrupp. The fund estimated the joint venture’s valuation gap at about 1.9 billion euros and urged Hiesinger to seek better terms, sources have said. Thyssenkrupp’s second-largest shareholder Cevian is also demanding that the deal be rebalanced to fix the widening performance gap between the different steel operations. The Swedish investor has appointed a director to Thyssenkrupp’s supervisory board and repeatedly demanded a broader restructuring to simplify the conglomerate. Meanwhile, unions hold half the seats on Thyssenkrupp’s supervisory board and any deal depends on their support, which Thyssenkrupp tried to win through major concessions regarding jobs and factories earlier this year. Worker consent, however, also depends on how the valuation gap will be closed. Thyssenkrupp’s deputy supervisory board chairman said workers would not support loading more debt on to the European steel venture.
Forest City Realty Is Restarting Deal Talks With Brookfield
" Bloomberg (06/18/18) Porter, Kiel; Tan, Gillian; Deveau, Scott"
Forest City Realty Trust Inc. (FCE.A) has re-launched discussions with Brookfield Asset Management Inc., according to sources, three months after the real estate investment trust said it believed shareholders would be better off if it remained as a standalone company. The potential price under discussion reportedly is close to the range of $25 to $25.50 per share that was being negotiated when talks fell apart in March. Forest City said in March that 18 interested buyers had entered confidentiality agreements. One specific large financial investor, which sources identified as Brookfield, made a non-binding proposal of $26 a share for the company. The board ultimately decided not to pursue that transaction, which was revised to $25 a share as of March 13, with a number of conditions attached. In a statement at the time, Forest City said it would have been supportive of a $25.50 all-cash deal with dividends paid through closing, and no conditions related to third-party consents or the completion of an internal reorganization. The REIT discussed a deal with Brookfield in January, sources said at the time. Analysts have estimated the forward net asset value of the company at about $28.50 a share, according to recent notes. At the same time that Forest City said its strategic review did not lead to a deal, it announced that nine directors would resign. Representatives from Starboard Value and Scopia Capital Management were among directors named to the board.
Fujifilm Lawsuit Making It Hard for Icahn to Find Xerox Buyer
" New York Post (06/18/19) Kosman, Josh"
Fujifilm's federal lawsuit against Xerox (XRX) will make it difficult for Carl Icahn to find another buyer for the copier maker, according to a source. "The true reason for Xerox's purported termination ... is the simple truth that the Xerox Board changed its mind—as induced by [Darwin] Deason and Icahn," the suit alleges. Deason, with backing from Icahn, successfully sued Xerox and Fuji in state court—preventing them from finalizing a January merger. Since then, Icahn and Deason have won control of the Xerox board and are shopping for a better price than the roughly $32 Fuji offered. In April, a state judge blocked the merger, ruling that the deal was so imbued with conflict it was likely the CEO and board, aided by Fuji, had breached their duty to Xerox shareholders. That opinion will make it more difficult for Fuji to win the lawsuit filed in federal court, the source said, because Fuji needs to be viewed as a victim of the scuttled merger. Icahn and Xerox likely will be tied up with the federal suit for months—making finding a suitor more difficult.
Icahn, SandRidge make final arguments to shareholders before Tuesday's vote
" NewsOK (06/19/18) Money, Jack"
A day before SandRidge Energy (SD) shareholders vote on the board makeup at the annual meeting on Tuesday, the company issued regulatory filing making last-minute criticisms of Carl Icahn. SandRidge's filing included a news release accusing Icahn of attempting to gain complete control of the company by encouraging shareholders to reallocate votes from candidates recommended by two proxy firms to candidates who are not. "In what can only be described as a material omission, Icahn has not divulged that doing so may ... give Icahn control of the board," the release stated. The other filing involved an open letter Icahn released to shareholders Monday urging them to vote for all seven of his nominees, citing the company's declining stock price and its hedging policy for oil produced so far this year. Glass, Lewis & Co. and Institutional Shareholder Services Inc. (ISS) both recommend that SandRidge shareholders re-elect four current SandRidge directors. Both also recommend installing three Icahn nominees, a move that would allow the incumbents to retain control of the board but also give Icahn significant influence. Icahn's letter, meanwhile, reiterated his various concerns with the firm, including its proposed Bonanza Creek Energy acquisition and its creation of a poison pill that would require any entity acquiring 10% or more of the company's stock to adequately compensate other shareholders as part of the deal. It also criticized SandRidge's payoff to former CEO James Bennett when it released him without cause, its rejection of Midstates Petroleum Co.'s offer to acquire the company, and its ongoing strategic review.
In Icahn-SandRidge Tiff, Bitter Words Hide Overlapping Goal
" Bloomberg (06/18/18) Nussbaum, Alex; Deveau, Scott"
Observers note that whether SandRidge Energy Inc. (SD) or Carl Icahn wins control of the board at the company's annual meeting on June 20, the oil and natural gas explorer is expected to sell some or all of its drilling rights as it seeks to reverse a long slide in its market value. The company's stock has fallen more than 40% since a 2016 bankruptcy, and Icahn is seeking to replace its entire seven-member board. Coker & Palmer Inc. analyst David Beard notes, "Icahn and the management team are probably closer than a lot of these fights would suggest. They both want to sell the company—it's just a matter of magnitude and speed. Icahn wants to move faster. If you agree, you'll vote for him." However, SandRidge raised concerns about Icahn taking control of the board given that it had signed confidentiality agreements to share information with 17 potential bidders, Icahn included. "If Icahn gets his way by seizing control of or placing his non-independent nominees on the board, he will be in a position to simultaneously run and bid for the company—putting his interests ahead of other shareholders," the company said. Icahn, the company's biggest shareholder with a 13.6% stake, countered, "The facts show the board's strategic review process is a disingenuous sham—window dressing designed to convince shareholders that this board actually wants to maximize value when in reality their primary focus is (and always has been) perpetuating themselves in office."
Britain's Tesco Pledges to End All-White Board
" Reuters (06/15/18) Davey, James"
Tesco Chairman John Allan on June 15 promised to end the all-white composition of the company's board of directors. The U.K. supermarket group's current board has 14 white members, three of them women. Its 12-person executive committee also is all white. "Tesco is actually ... in very good shape in terms of diversity as far as our customer base, our colleagues, many layers of management are concerned," Allan told shareholders at the company's annual meeting in response to an investor question. "We aren't there as fully as we need to be at the moment on the board," he acknowledged. Allan said he is personally involved in locating diverse board candidates. "I'll be very disappointed if by next year's AGM we haven't cracked that," he said. Allan also defended the near 5 million pound ($6.6 million) pay package for CEO Dave Lewis in 2017-18, called "excessive" by shareholder advisory group Pirc. Lewis joined Tesco in 2014 when it was in rough shape and has led its turnaround. "I would defend (him) to the hilt, I think he's worth every penny that we pay him," Allan said. Ninety-seven percent of shareholders who voted at the AGM supported the company's compensation report.
Disney Plans to Add Cash to Its Bid for Fox
" Financial Times (06/18/18) Platt, Eric; Fontanella-Khan, James"
Walt Disney (DIS) is planning to add a cash component to its previously agreed $52.4 billion stock offer for 21st Century Fox (FOXA) assets, according to sources. It remains uncertain whether its new bid will top the $65 billion all-cash offer from Comcast (CMCSA). AllianceBernstein analyst Todd Juenger said, "Disney will respond. But we doubt that was Comcast's best-and-final offer." Fox's board will meet on June 20, and if it says the Comcast offer is superior to Disney's, Disney will have five business days to match its rival. Comcast has said it will pay the $1.5 billion fee that Fox would owe to Disney if it walked away from its agreement. Fox's Rupert Murdoch has faced pressure from shareholders to consider the competing bid. Christopher Hohn, whose hedge fund TCI has built a 7.4% stake in the company, said in a letter to Murdoch that he was "aware that the Murdoch family has a potential conflict of interest because of capital gains tax, which could lead them to preferring a lower priced Disney stock offer, to a higher priced offer from Comcast."