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Breaking news and more: Your media center for shareholder activism and corporate governance.

Outerwall Inc. (OUTR) announced it had agreed to be taken private by affiliates of private equity firm Apollo Global Management LLC (APO), following pressure from Engaged Capital LLC. The roughly $1.6 billion deal comes about four months after Outerwall said it would explore strategic and financial alternatives. Engaged Capital lobbied the company in February to consider strategic options, including going private, and has also pushed it to sell or shut down its phone recycling business called ecoATM. Engaged Capital is Outerwall’s second-largest shareholder with a 14.1% stake as of June 2. Outerwall, the owner of Redbox video rental kiosks, saw its shares rise 11% to $52.10 in premarket trading on Monday, slightly higher than the cash offer price of $52 a share.

Yahoo Inc.'s (YHOO) board of directors has agreed to sell the company's core internet operations and land holdings to Verizon Communications (VZ) for $4.8 billion.  Following the sale, Yahoo shareholders will retain approximately $41 billion in investments in the Chinese e-commerce company Alibaba, as well as Yahoo Japan and a small portfolio of patents.  That is compared with the Silicon Valley company's peak value of more than $125 billion, achieved in January 2000.  Yahoo CEO Marissa Mayer is not expected to join Verizon.  Equilar, though, says she is due to receive a severance payout worth nearly $57 million.  As of press time, both companies involved had yet to comment publicly on the deal.

Sandell Asset Management, which reportedly owns a small holding in SABMiller, believes Anheuser-Busch InBev's (BUD) proposed £77 billion takeover of the beer giant treats shareholders unfairly. The hedge fund joins a handful of other shareholders engaging the brewer. Elliott Capital Advisors has signaled concerns about the deal's structure; The Children's Investment Fund is believed to be pressing SAB to seek a higher offer from AB InBev; and some large institutional investors also are questioning the takeover. AB InBev has offered £44-per-share cash offer or, as an alternative, unlisted AB InBev stock that must be held for five years along with a small amount of cash. However, sterling's recent fall means the stock offer is now valued at £50 a share—more than the £39.03 it was worth when SAB first agreed to the deal last October. Because the shares are unlisted and have a five-year lock-up, that option is unappealing to most SAB shareholders, who will have to take the lower all-cash offer. Sandell, the hedge fund founded by Swedish billionaire Tom Sandell, is known for its 2014 campaign to push transport operator FirstGroup to offload its American branch. Sandell is thought to have acquired its position in SAB late last year.

The Hartford's (HIG) board of directors on Thursday approved an amendment to the company's bylaws, enabling eligible shareholders to nominate their own director candidates in the company's proxy statement.  The Hartford's board proactively took this action in order to enhance the firm's governance practices.  The amended bylaws include the following: a shareholder, or group of up to 20 shareholders, may nominate a board member and have the nominee included in the company's proxy statement; the shareholder, or group collectively, must have held no less than 3% of the company's common stock for three years in order to make a nomination; and the shareholder, or group, may nominate as many as two directors, or a number of directors equal to 20% of the board, whichever is greater.

Elliott Management, which owns a 1.46% stake in SABMiller through its U.K. arm, has sent a letter to the South African brewer’s board regarding the structure of its proposed £71 billion takeover by U.S. rival Anheuser-Busch InBev. Investors have been critical of a 13% gap between the value of the two options that shareholders in SABMiller can elect. A drop in the value of sterling following the U.K. vote to leave the EU has heightened the difference between AB InBev’s £44 a share cash offer for 59% of the company and a mostly stock alternative for the remainder. Investors have said the mostly stock alternative was designed to benefit SABMiller’s major shareholders BevCo and U.S. tobacco company Altria, which own about 40% of SABMiller. Elliott wrote to SABMiller’s board about its concerns in the last several days, according to sources. Hedge funds TCI and Davidson Kempner have also acquired stakes in the brewer and are pushing for a higher cash offer.

One month after Elliott Management Corp. acquired a 4.7% stake in home builder PulteGroup Inc. (PHM), the company announced it will add three new board members and has reached a settlement with the hedge fund.  The company also outlined plans to slow down its growth in future land spending and make an additional $1 billion in share repurchases.  In an agreement with Elliott released in a filing Thursday, PulteGroup will seek to reduce selling, general, and administrative expenses to 9% of home sales revenue next year, down from 10% this year.  In return, Elliott will back the company's board nominees at its annual meeting next May and will not engage in a proxy battle.  The agreement expires in one year.  PulteGroup CEO Richard J. Dugas Jr. has been battling company founder and largest shareholder William J. “Bill” Pulte over the company's future.  In April, Pulte demanded that Dugas resign amid what he said was poor performance compared with rival home builders.  Two of the new board members will join the search committee to select a successor to Dugas.

Abstract News © Copyright 2016 INFORMATION, INC.

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Jeffrey Smith Got Everything He Wanted in Yahoo's Sale to Verizon, Except a Big Profit
" Forbes (07/25/16) Gara, Antoine"

When Starboard Value’s Jeffrey Smith acquired a large stake in Yahoo (YHOO) in late 2014, he called for the company to merge with AOL and free its lucrative minority stakes in Alibaba and Yahoo Japan.  Yahoo’s sale to Verizon (VZ) for $4.8 billion finally fulfills Smith’s plans: in May of 2015, Verizon bought AOL, and now Verizon is buying Yahoo.  The next step is getting rid of Yahoo's crown jewel minority stakes, as well as other assets like intellectual property.  However, Yahoo shares have not moved since Smith laid out his idea for a Yahoo and AOL merger in a September 2014 letter.  Yahoo's shares were trading at $40 when Smith launched his campaign; as of mid-day trading on Monday, Yahoo was trading below $39 a share.  Now that Yahoo's sale is finally over, shareholders have little to show for the time and effort spent on the company's turnaround.  But there may still be a chance Yahoo shareholders will see a payoff.  With the sale of the company's core business done, Yahoo will work to realize the value of its minority investments.  If Yahoo can exit Alibaba and Yahoo Japan in a tax efficient manner, it might lead to gains.  It appears unlikely Yahoo will ever achieve the $56.62 a share price Smith predicted in 2014, though, without significant out-performance from Alibaba.

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Elliott Management Shows PulteGroup Founder How to Get Things Done
" New York Times (07/22/16) Allison, Kevin"

Elliott Management's recent success at the PulteGroup (PHM) demonstrates constructive shareholder engagement, in deep contrast to an internal campaign waged by the home builder's founder. Elliott, which owns 4.7% of the $7 billion company, convinced the PulteGroup to add three new directors to its board; and the company also agreed to trim investment in new land and repurchase more shares. Founder William Pulte, meanwhile, has led a separate campaign, criticizing the builder's performance and demanding the immediate ouster of CEO Richard Dugas. His strategies, however—including a secret meeting with a director—turned the board against him. With the PulteGroup's shares trading at a significant discount to competitor Lennar, both Pulte and Elliott likely saw some of the same potential to improve performance. Instead of fighting publicly with the firm, Elliott worked behind the scenes to change both the board and strategy, scoring a win faster than PulteGroup's combative founder.

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Corporate Heavyweights Back Governance Practices
" Wall Street Journal (07/21/16) Lublin, Joann S."

In an attempt to influence how public companies are run, a coalition is backing a number of corporate-governance practices such as avoiding dual-class shares and replacing ineffective directors.  The governance principles, to be disclosed July 21, are supported by the heads of Berkshire Hathaway Inc. (BRKA), General Electric (GE), General Motors (GM), and more.  ValueAct Capital Management Ltd., BlackRock Inc., and Vanguard Group are also part of the coalition.  The goal is "to drive best governance practices through companies of all sizes," comments Glenn H. Booraem, fund treasurer at Vanguard.  Issues such as splitting the roles of chairman and CEO and director term limits were not addressed.  The coalition's list of "Commonsense Principles of Corporate Governance," however, does call for a continuing board-refreshment process that includes regular evaluations of board members to ensure their skill sets "remain sufficiently current."  The group also recommended that boards consider periodic rotation of committee chairs and the lead independent director.  Nelson Peltz, who does not belong to the coalition, nevertheless welcomed the coalition's efforts.  "These principles are music to our ears," said Peltz, a founding partner of Trian Fund Management.  "Sound corporate governance can lead to better long-term growth and performance at public companies."

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Big Funds Push Back Against Activist Investor Settlements
" Reuters (07/18/16) Flaherty, Michael"

Major institutional investors around the globe are spurning activist settlements, arguing that granting board seats to shareholders with short-term agendas could hurt long-term performance. BlackRock Inc. (BLK) and Norges Bank Investment Management, Norway's $872 billion sovereign wealth fund, are among the funds urging companies to consult them before engaging with an activist. A recent example is Barington Capital's campaign for two director positions at U.S. retailer Chico's FAS (CHS). The hedge fund dropped its fight after realizing it could not win enough institutional investor backing for its nominees, sources said. Chico's new CEO, Shelley Broader, reportedly had discussed her strategy with the company's largest shareholders in December; and after Barington arrived, they indicated their support for a fight with the hedge fund. "Some (institutional investors) feel that board seats should not be a bargaining chip, as this practice distorts the board's election process," said Ernst & Young in a summary of its survey of 50 large shareholders in March. Activists still favor settlements over proxy fights, however, and most multibillion-dollar hedge funds can complete deals with companies. But the resistance is putting more pressure on activist hedge fund managers, and their presence on company boards is facing deeper scrutiny.

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House Seeks to Block SEC Plans for 'Universal Ballot' in Corporate Elections
" Wall Street Journal (07/07/16) Ackerman, Andrew"

The Securities and Exchange Commission (SEC) is expected to propose corporate-ballot rules soon that would allow for a “universal ballot,” a single voting form in contested corporate elections. The change would give activist investors more ammunition to defeat management's board candidates. The plan hit a hurdle on Thursday, however, when the House voted to add language to a spending bill that would bar the SEC from writing such rules. Currently, voters in contested elections receive two sets of ballots, each featuring a rival slate of board candidates. Universal ballots are allowed if both sides agree to them, but they are rare. Supporters say universal ballots would allow shareholders to split their votes more easily, but companies worry about confusing individual investors and/or introducing uncertainty into the voting process. The fight over universal ballots was unexpected, partly because the rule has not yet been proposed.

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Western Shareholder Activism Arrives in China
" Financial Times (07/05/16) Sender, Henny"

Activist hedge funds have experienced mixed results when they have pressed Japanese companies to improve returns to shareholders. Now Indus Capital Partners, a New York-based Asia focused hedge fund, has decided to try its luck with shareholder activism in China. Indus Capital Partners has entered into a dialogue with China Mobile to see if global investors can get a mainland company to focus more on raising the payout to those who hold its stock. The experiment comes at a time when the government is assessing how to reform state-owned enterprises (SOEs), which can sometimes be lean and profitable, but usually have objectives far different from companies in the capitalist west. Even when the SOEs are listed and have all the trappings of a public company, including a board of directors and pay out dividends, they remain in the control of a party committee and exist as much to maintain employment and subsidize management as they do to pay dividends to shareholders. Today they remain in an uneasy state of transition, caught between the conflicting demands of the government and their outside shareholders.

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Aligning Board Talent With Strategy a Key Challenge
" PRNewswire (06/21/16)"

A new global survey by KPMG's Board Leadership Center found that roughly 75 percent of corporate directors say they face a critical challenge aligning board talent with the company's long-term strategy. Furthermore, about three in five want greater diversity and viewpoints on the board. Survey respondents also identified significant barriers to refining the board's makeup, with issues ranging from the right mix of skills and overcoming "status quo" thinking to lack of formal succession plans. KPMG polled over 2,300 board members and executives in 46 countries to better understand how directors are thinking about the mix of skills, backgrounds, experiences, and perspectives in the boardroom. The barrier most frequently cited by respondents to building a high-performing board was "finding directors with both general business experience and specific expertise needed by the company" (69 percent), followed by identifying the board's future talent needs (55 percent).

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Activists' Battles With Companies Played Out in the Classroom
" Financial Times (06/20/16) Walker, Owen"

Columbia University, Duke University's Fuqua School of Business, and other schools are offering classes about activist investing. Among the topics discussed are activist history, hedge fund strategies, and controversies related to those strategies. Starboard Value's Jeffrey Smith spoke to the Columbia class. Attorneys and investment bankers who help companies defend themselves against activist campaigns also have been among the speakers. The majority of students who take the Columbia course are not interested in becoming activists. Instead, they believe the jobs they eventually take will require them to defend against activists.

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Icahn, Paulson Add Transparency, AIG President Says
" Reuters (06/15/16) Cohn, Carolyn"

American International Group (AIG) President and CEO Peter Hancock said on Wednesday that Carl Icahn and John Paulson are increasing transparency at the U.S. insurer through their representation on its board. Paulson and Samuel Merksamer, a managing director at Icahn Capital, joined AIG's board last month after Icahn campaigned last year for the company to split itself into three. AIG rebuffed Icahn's proposal in January in favor of its own strategy, which entailed spinning off its mortgage insurance unit and selling its broker-dealer network. “Inclusion of the activists has forced us to be a little bit more transparent,” Hancock conceded at a briefing in London, adding that after seeing the company from the inside, the investors were gaining better understanding of the hurdles to simplifying the company. He said part of that process would include cutting motor insurance business in some of the countries in which it operates, following a decision to pull out of motor insurance in China. Icahn, AIG's fourth-largest investor, has argued that a split would help AIG relieve itself of the regulatory burden of being a "systemically important financial institution," which demands higher capital cushions.

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A New Status Quo for the Boardroom
" Wall Street Journal (06/15/16) Garden, Ed"

In an opinion piece, Ed Garden, chief investment officer of Trian Fund Management, says shareholders are growing less passive for a number of reasons.  First, institutional shareholders have gotten larger, and their ownership of corporate America has become more concentrated.  Second, many of these institutional shareholders have developed deep industry expertise.  In addition, poor performance by management and outright abuse of power has created a mindset among shareholders that management teams have lost their right to be left alone.  Lastly, there are a few investors—commonly known as “activists” but whom Garden calls “highly engaged shareowners”—who are rousing shareholder support and providing the catalyst for management to be held accountable.  Critics have accused activists of pursuing a short-term bump in stock prices, and some politicians claim they lead to short-termism, rising inequality, and low pay for workers.  “But in my view,” Garden writes, “the management and directors of public companies, not the shareholders, have driven such short-term behavior, and the way to build strong companies and create jobs is not through government mandate or protecting weak management teams.”  Instead, it will occur because market forces will reward the companies in which management teams and highly engaged shareowners work together to achieve sustained, lasting growth, Garden says.

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Abstract News © Copyright 2016 INFORMATION, INC.

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Company Search

Company SearchInsert a ticker and see updated financial quote summary, company description and detailed information on any live or recently exited activist campaigns, including the activist’s investment thesis. This feature takes you chronologically through the activist’s 13D filings detailing increases or decreases in holdings and change in average cost per share and summarizing any activist measures taken. Additionally, the chart at the bottom of the page shows the stock price performance and its reaction to each 13D filing. For quick reference, there are links to the activist’s profile and returns history and any letters and agreements the activist has entered into in connection with this investment.

Activist Profile

Activist Profile View a detailed analysis of the activist histories of the 40+ top activists – updated and expanded on a continuous basis. Get detailed analysis on: (i) the returns for each activist investor, including: (A) which activists have outperformed the S&P500 on their individual and aggregated 13D filings, (B) how their returns on live filings compare to their returns on exited filings, and (C) how their returns on filings change when they take significant activist measures; (ii) the average holding periods for each activist investor on all filings, exited filings, live filings and filings where they have taken significant activist measures; and (iii) what activist measures were taken, when they were taken and how the underlying stock reacted to the filing.

In this month’s Activist Report

Standstill Agreement Analysis

Search Activist Campaigns

Search live and exited filings by Investor, Dates, Market Caps, Industry and Type of Activism (i.e., Proxy fights for board seats, Posion pill issues, Spinoff, etc.). Sort results by date, investors, return on investment, etc. Easy access to link to detailed analysis of activist campaign and any letters or agreements entered into in connection therewith.

Search 13D Monitor Archive

Search FilingsSearch our list of historical 13D Monitor filings. The list contains approximately 4.000 material filings since 2006 and also includes the associated report.

Activist Letters and Agreements

Search our library of activist letters and agreements to find letters sent by activists to Companies, Settlement Agreements, Standstill Agreements, etc. Search this library by filer, company, type of letter or agreement, or any combination thereof.

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