Bank of New York Mellon Corp. (BK) posted fourth-quarter profit of $870 million, up from $693 million a year earlier. The country's oldest bank has benefited from a sustained cost-cutting campaign launched in 2014 under pressure from Trian Fund Management LP. Shares are up 11% since Dec. 2, 2014, when the bank added Trian's Edward Garden to its board. Trian had acquired a position in the company that June and sought cost reductions. In October 2014, BNY Mellon executives announced plans to eliminate $500 million in expenses through 2017. Trian has been a positive influence, according to UBS analyst Brennan Hawken. "Investors used to love to deride BNY, calling them '50 cents,'" he said. "Earnings every quarter was 50 cents. Since then, we've seen steady growth in earnings per share." The bank's revenue growth has surpassed increases in expenses, producing better margins and operating leverage for three years in a row, Hawken noted. Finance chief Thomas Gibbons added that the bank's asset-management arm likely will generate greater performance fees this year and that he expects revenue growth to outpace expenses again in 2017.
Amber Capital says the price of a buyout offer by France's Lactalis undervalues Italy's Parmalat, and it won't be tendering its 3% stake. Lactalis has launched an offer on the 12.26% of Parmalat it doesn't already own. Lactalis, a private company, hopes to eventually delist Parmalat. Lactalis has proposed purchasing Parmalat shares for 2.8 euros each. "We believe the price of Lactalis' offer is too low and does not reflect the real value of Parmalat," says Amber Capital portfolio manager Arturo Albano. A group of retail shareholders in the Azione Parmalat association also is questioning the bid. Parmalat is in an ongoing dispute with Citigroup, and minority shareholders could lose out on any settlement if the shares are sold to Lactalis before a resolution. "On Dec. 29 we asked [market watchdog] Consob to request Parmalat to provide additional information on the outlook for the next 2-3 years and on developments related to its dispute with Citi which includes a significant damage request," Albano said. Furthermore, Parmalat has invested one billion euros in the past three years in countries such as Brazil, Mexico, and Australia, and has yet to reap the rewards of those investments.
Ancora Advisors LLC has delivered a letter to shareholders of Edgewater Technology Inc. (EDGW) in regard to its campaign to remove four board directors and replace them with its own nominees. Ancora, which owns a 9.2% stake in the company, denounced Edgewater's attempt to mischaracterize the investor in its own recent letter to shareholders. Ancora said it attempted to reach a compromise with the board in private discussions spanning many months, but after the board's repeated failure to engage in a constructive manner, it has no choice but to resort to launching a consent solicitation. "It is time incumbent directors are held accountable," the letter states. Edgewater's long-term underperformance, excessive executive compensation, and poor corporate governance practices are symptoms of entrenched incumbent directors who have failed to consider shareholders' interests, it said. In contrast, Ancora's "highly-qualified candidates, who are fully aligned with stockholders' interests, bring the fresh perspective, skill sets, and experience necessary to significantly improve Edgewater's financial and operating performance," it said.
Directors of Christopher & Banks (CBK) terminated CEO LuAnn Via "without cause," according to a filing with securities regulators. The Plymouth, Minn.-based women's apparel retailer also announced disappointing holiday sales results. The news pushed down the company's shares 32% during the first half-hour of trading on Jan. 17. Via will receive $850,000 in severance, as well as other payouts for accrued vacation and other incentives. Joel Waller, former CEO of The Wet Seal and Wilsons Leather, will serve as interim CEO while the company searches for a permanent successor. Furthermore, Lisa Wardell resigned as board chairman, and Kent Kleesberger is her replacement. The leadership changes follow an overhaul of the company's board last year, including the addition of Macellum Capital Management's Jonathan Duskin, who had argued that the board was "heavily skewed" to Minneapolis-area business people who do not have enough background in retail.
Jana Partners fund manager Barry Rosenstein recently purchased a large stake in the New York-based pharmaceutical company Bristol-Myers Squibb (BMY), according to a source. The investment, which is a top position for the fund, was disclosed privately to Rosenstein's investors in a risk report, the source said. Jana Partners frequently has launched campaigns and proxy contests, suggesting that one could be forthcoming, especially considering that Rosenstein has not initiated a new campaign in several months. An activist could launch a contest at Bristol-Myers to press for strategic options ahead of a Feb. 2 deadline to nominate dissident director candidates for the company's 2017 annual meeting, expected in May. Steve Chesney, analyst at Atlantic Equities, said Rosenstein or another activist fund could target what he sees as Bristol-Myers' over-concentrated portfolio and its over-focus on one drug, blockbuster cancer therapy Opdivo. He suggested the company could be urged to make acquisitions or invest more heavily in business development so it can become more diversified. An activist also could pressure Bristol-Myers to be acquired by another drug company, as its large immune-oncology drug portfolio, led by Opdivo, could make it an attractive candidate. Leading global pharmaceutical firms Pfizer (PFE), Merck (MRK), Johnson & Johnson (JNJ), and Novartis (NVS) are all capable of acquiring Bristol-Myers, but it is uncertain whether they would be interested.
Alliance Trust has outlined details of a strategic overhaul to boost its investment performance, responding to pressure from Elliott Advisors. The Dundee-based financial services group said last month it would shift responsibility for investing its £3.3 billion equity portfolio to multiple investment managers, and it appointed Willis Towers Watson as the overall investment manager. On Monday, Alliance Trust confirmed Willis Towers Watson had chosen eight equity managers from the United States, United Kingdom, and Canada. Under the new structure, each manager will choose 20 stocks, which will make up the combined Alliance Trust portfolio. Lord Smith of Kelvin, chairman of Alliance Trust, said the new investment strategy would deliver stable returns for shareholders. Alliance Trust investors are slated to vote on the proposed restructuring at a general meeting on Feb. 28. Elliott—the company's biggest shareholder, with a roughly 19% stake—launched a campaign at Alliance last year, criticizing the group's lackluster performance, excessive costs, and unprofitable subsidiaries. In April 2015, Elliott led a shareholder rebellion over the high compensation of the company's former CEO, Katherine Garrett-Cox. Alliance agreed to appoint two of three independent directors nominated by Elliott, before Garrett-Cox departed in 2015.