13D Monitor Real-time Activist Newsfeed


Irwin Simon, One of the Food Industry's Longest-Tenured CEOs, to Step Down From Hain Celestial
" CNBC (06/25/18) Hirsch, Lauren"

On June 25, Hain Celestial (HAIN) announced that Irwin Simon is stepping down as CEO. Simon, who founded the organic food company a quarter of a century ago, will become non-executive chairman after his replacement is selected. Hain is working with an executive search firm to fill the post. The company is under pressure from Engaged Capital, which has a 9.9% stake in the company. Engaged's founder, Glenn Welling, was given a seat on the board as part of a settlement with the company in October.

New Xerox CEO Calls Fujifilm Moves to Renew Talks 'Delusional'
" Bloomberg (06/25/18) Hammond, Ed; Hytha, Michael"

Fujifilm Holding's accounting problems have made it impossible for the company to merge with Xerox (XRX), according to John Visentin, chief executive officer of Xerox, in a letter to Shigetaka Komori, his counterpart at Fujifilm. Visentin, who was recently elevated to the position, criticized Komori's effort to revive merger talks, echoing arguments made by shareholders Carl Icahn and Darwin Deason. The two held a combined stake of almost 13% in the company as of May, according to data from Bloomberg. Deason has won a court order blocking the companies' $6.1 billion merger deal. Icahn and Deason contend that former Xerox CEO Jeffery Jacobson acted without authorization to strike the deal to preserve his own job at the expense of shareholder value. Fujifilm recently sued Xerox, accusing it of breaking the merger contract and blaming the demise of the transaction on Icahn and Deason, "who, notwithstanding their minority ownership of Xerox shares, have yanked the Xerox board in more directions than can be counted." The New York state court judge who blocked the merger in April also recently rejected Fujifilm's request to dissolve his order, cutting off a possible option for keeping the deal alive.

Whitbread Boss to Face Questions Over Potential Sell-Off of Costa Coffee
" Independent (London) (06/24/18) Sembhy, Ravender"

Whitbread is scheduled to report its first-quarter results on Wednesday. Investors also will be looking for Alison Brittain, chief executive officer of Whitbread, to provide an update on the group's plans for Costa Coffee. Elliott Management has pressured Whitbread to spin off the coffee chain. Earlier in the year, the group said it would split Costa and list it as a separate entity. However, it was reported in May that Whitbread has been approached informally about a potential buyout of Costa. Private equity firms, including Bain Capital, CVC, and TPG, have showed interest in Costa, which could open the door to a potential 3 billion pounds sale of the chain. "The sales and revenues figures will most likely be overshadowed by the media and investors demanding to know more of the possible demerger of the Costa coffee business where management have suggested a possible separate share listing," said Graham Spooner, investment research analyst at The Share Center. "However, it has been rumored that several private equity vehicles have been interested and we'll wait to see if management have been lured."

The Stilwell Group Sends First Letter to Shareholders of Wheeler Real Estate Investment Trust
" Markets Insider (06/25/18)"

In a letter to shareholders of Wheeler Real Estate Investment Trust Inc. (WHLR), the Stilwell Group, one of the company's biggest stockholders, said Stilwell Activist Investments L.P. plans to file a preliminary proxy statement and accompanying proxy card with the Securities and Exchange Commission to be used to solicit votes for the election of a slate of director nominees at the company's 2018 annual meeting. The letter states that "the participants in the proxy solicitation are anticipated to be Stilwell Activist Investments, Stilwell Value Partners VII L.P., Stilwell Activist Fund L.P., Stilwell Value LLC , Joseph Stilwell, Paula J. Poskon, and Corissa Briglia Porcelli. As of the date hereof, Stilwell Activist Investments directly beneficially owns 671,610 shares of common stock, $0.01 par value per share of  the Company (the 'Common Stock'), which includes 19,126 shares of the Company's Series D Cumulative Convertible Preferred Stock, no par value (the 'Series D Preferred Stock'), that are convertible into 28,193 shares of Common Stock."

India Inc.'s Corporate Governance Agenda Starting 2019
" BloombergQuint (06/22/18) Upadhyay, Payaswini"

India is tightening its corporate governance standards at listed companies starting in April 2019. Currently, a promoter of a listed entity or its holding, subsidiary, or associate company cannot be an independent director, but next year, the restriction will be extended to members of the promoter group of the listed entity. On the issue of financial statements, listed companies must disclose consolidated financial statements on a quarterly basis, submit a statement of cash flow, and disclose material adjustments made in the results of the last quarter that pertain to previous quarters. Auditors will need to conduct a limited review of all the entities whose accounts are to be consolidated with that of the parent company, and management will be required to quantify the qualifications of the auditor. India is also raising the approval threshold for related party transactions. For example, payments to a related party for brand use or royalty that exceed 2% of the annual consolidated turnover will qualify as material, and once qualified, a material related-party transaction will need shareholder approval. Moreover, related parties will be allowed to cast a negative vote. And starting in April 2020, the roles of chairperson and management must be kept separate at the top 500 listed companies by market capitalization.

Weatherford International Engaged by Investor
" Financial Times (06/24/18) Fortado, Lindsay; Crooks, Ed"

The Texas-based hedge fund Q Investments has taken a small stake in Weatherford International (WFT) and is calling on the board to sell its assets or the entire company before its "over-levered capital structure" destroys "what remaining value the shareholders have left." The move follows a decade of underperformance at one of the world's largest oilfield services groups. Former Halliburton (HAL) CFO Mark McCollum took over as CEO of Weatherford last year, launching a "transformation program" in November to improve operating earnings by $1 billion annually. However investors are not convinced that he can succeed, analysts say. Brad Handler of Jefferies said, "Mark McCollum has a good track record, and is well respected in the industry. But it's going to take a while to achieve the results he wants to see." In a letter to Weatherford's board, Q—which owns a stake of just 0.02%—calls McCollum's turnaround efforts "woefully inadequate." The hedge fund believes other investors also are unhappy about the company's performance and will join its campaign for change. Q wrote, "We believe the most viable path would be to sell the entire company; however, we would be open to any and all alternatives." It is not calling for new board members as of yet, but said it was "incomprehensible" that six directors who were in place during the tenure of the previous CEO remained on the board. 

Caius Capital Piles Pressure on UniCredit to Convert Complex Securities
" Financial Times (06/25/18) Arnold, Martin"

The London-based hedge fund Caius Capital is calling on UniCredit's biggest investors to put pressure on Italy's largest bank to convert €3 billion of complex instruments into common equity. In a letter to 11 of the biggest investors in UniCredit's equity and debt, Caius explained how they will gain if the bank converts the instruments. This follows a call by Caius last month on the European Banking Authority to open an investigation into "incorrect regulatory capital treatment derived by UniCredit" from its 2008 issue of €2.98 billion in convertible and subordinated hybrid equity-linked securities (Cashes). Caius said in the letter to investors that there was some overlap between holders of the Cashes and groups that used to be among UniCredit's biggest shareholders, including some of Italy's municipal banking foundations, which own about €500 million of the Cashes and about 2% of its shares. "It would be troubling indeed if UniCredit were to prioritize the interests of a small number of their own investors who are also Cashes holders over the interests of the vast majority who are not," Caius wrote. "Although the historic disparity of returns between ordinary shareholders and holders of the Cashes cannot be retroactively addressed, an exchange of the Cashes today would bring both immediate and longer-term benefits to UniCredit investors."

Shareholders Speak Up as Corporate Japan Opens Dialogue
" Nikkei Asian Review (06/22/18) Uede, Yuki"

According to IR Japan, 42 Japanese companies have received shareholder proposals so far for their annual meetings in June. Activist investors sent propositions to 10 businesses, pushing for higher dividends and corporate governance reforms. On June 21, Alpine Electronics considered a proposal from Hong Kong-based Oasis Management for independent directors, which was rejected despite Oasis COO Phillip Meyer arguing that the company's share price would roughly double. Meanwhile, proposals to ban the same person from holding the chairman and CEO positions simultaneously were received by both Mitsubishi UFJ Financial Group and Mizuho Financial Group. Yutaka Suzuki of the Daiwa Institute of Research notes that asset managers must disclose their voting records, so they "can no longer vote in ways they can't explain."

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.

Mellanox Downplays Drama of Starboard's Attempt to Take Over Board
" Calcalist (06/21/18) Reich, Dror"

Starboard Value has reached an agreement with Mellanox Technologies (MLNX) over the composition of the Israeli company's board of directors. The hedge fund acquired a 10.5% stake in the company in November, and in January announced its intention to replace all current members of the board. According to the agreement, three of the board's eleven current members will step down, and will be replaced by two of Starboard's candidates and one candidate agreed upon both by Starboard and Mellanox. Also, Starboard has secured the right to appoint a direct representative to the board if Mellanox fails to meet certain performance targets through the fourth quarter of 2019. Starboard has criticized the company's research and development expenses and its operating targets. The hedge fund will vote for Mellanox's board candidates at the company's annual shareholder meeting in July, rather than present its own list. Mellanox CEO Eyal Waldman said the agreement was a good solution, enabling the company to keep a board majority.

AmTrust Goes Private in $2.95 Billion Cash Deal
" Wall Street Journal (06/21/18)"

AmTrust Financial Services Inc. (AFSI) says shareholders support its plan to be taken private by two New York families and a private-equity firm. Carl Icahn, who recently owned as much as a 9.4% stake in the company, had initially opposed the plan, saying it was "happening at the wrong price at the wrong time" and was a move by the families and company to manipulate the shareholders into voting for a deal that only benefits them. Icahn later agreed to support the plan when the buyers increased the offer from $2.7 billion to $2.95 billion. Evergreen Parent LP, an entity formed by AmTrust Chairman and CEO Barry Zyskind, George and Leah Karfunkel, and Stone Point Capital LLC, will acquire 45% of the insurance company. The transaction is expected to close during the second half of 2018.

Premier Foods' Second-Largest Shareholder Plans to Vote Against CEO Re-Election
" Financial Times (06/21/18) Daneshkhu, Scheherazade"

On June 21, Premier Foods said Oasis Management, its second-largest shareholder with an 8.6% stake, plans to vote against the re-election of CEO Gavin Darby at its annual meeting next month. The company indicated that Oasis "may encourage others to do the same." Premier Chairman Keith Hamill voiced support for Darby, noting that "the board strongly believes that Gavin Darby is the best person to lead the company and to execute the board's strategy." Oasis fought for and won a board seat in March 2017, but relinquished it in March 2018. While some shareholders credit Darby with reducing the company's debt load, Paulson & Co. called Premier "grossly mismanaged" last year after the board rejected a potential offer from U.S. spice maker McCormick (MKC).

ConAgra Approaches Pinnacle Foods About Possible Deal
" Bloomberg (06/21/18) Hammond, Ed; Nair, Dinesh"

ConAgra Brands Inc. (CAG) has approached Pinnacle Foods Inc. (PF) about a possible transaction that would add popular frozen-food brands to its roster at a time when frozen-food sales are booming, sources say. The rival food companies have had contact in recent weeks, the sources say. Deliberations are at a preliminary stage and may not result in a deal, the sources say. Jana, which has a 9.5% stake in Pinnacle, earlier this year called on the company to explore a sale. Jana said in a filing that it thinks Pinnacle is in a good position to weigh consolidation given its strength in the frozen-food sector. Jana also has history with ConAgra, which in 2015 agreed to add two directors to its board in a settlement with Jana. It owns a stake in ConAgra of less than 1%.

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."

Miner Petropavlovsk's Biggest Shareholder Outlines His Case for Change
" EuroNews (06/21/18) Lewis, Barbara; Afanasieva, Dasha"

Petropavlovsk's largest shareholder in a letter to fellow investors calls on the Russian miner to sell its stake in an iron ore unit and to draw up deal targets in the gold sector. Kazakh entrepreneur Kenges Rakishev, who holds a 22% stake in Petropavlovsk, says he intends to remain a long-term investor in the company. Rakishev says he has no connection to investors CABS Platform and Slevin, which hold just over 9% of the company, but largely agrees with their demand for board change. Rakishev, CABS Platform, and Slevin want former CEO Pavel Maslovskiy to return, and he says new management would immediately pursue opportunities in the gold sector. Shareholders started demanding change just weeks after Roman Deniskin was appointed CEO in April. Deniskin says he has engaged with Rakishev on several occasions but did not receive a response to recent requests for meetings. Shareholders will vote on changing the board at the June 29 annual general meeting in London. to Be Acquired for $2 Billion
" Jacksonville Business Journal (FL) (06/21/18) Robinson, Will"

Siris Capital Group LLC plans to acquire Group Inc. (WEB) in a cash deal worth about $2 billion. The deal must be unanimously approved by's board. A special meeting of the board will be held as soon as possible after a filing with the Securities and Exchange Commission. "This transaction will provide shareholders with immediate and substantial cash value, while also providing us with a partner that shares in our commitment to customers and employees and can add strategic and operational value," CEO and Chairman David Brown said in a statement. "Based on our extensive engagement with Siris over the past two months and our prior discussions with them, we are confident that Siris' support will enable to execute on its strategy and next phase of growth." may solicit alternative acquisition proposals from the date of the agreement until Aug. 5. The acquisition is expected to be finalized in the fourth quarter of 2018. The news comes less than two weeks after Starboard Value bought nearly 10% of stock.

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 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.

Noble Group Wins Over Key Shareholder in Major Step to Survival
" Reuters (06/19/18) Dutta, Rushil; Aravindan, Aradhana"

Abu Dhabi-based Goldilocks Investment will support Noble Group's revised proposal to restructure its business. A key shareholder in Noble with an 8.1% stake, Goldilocks Investment had resisted the previous plan and filed complaints and lawsuits against the company, arguing that the plan protected creditors at the expense of shareholders. Noble will give senior creditors a 70% stake in return for halving its $3.4 billion in debt. Existing shareholders would have received a 15% equity stake in the new company, but will get 20% under the sweetened deal. Management will hold the remaining 10% of the company. The Abu Dhabi Financial Group equity fund also will be entitled to nominate one person to the board of directors in the restructured group. Noble's market value has fallen to about S$104 million ($76 million) from $6 billion in February 2015, when Iceberg Research questioned its accounting. Over the past three years, the company has sold billions of dollars of assets, taken hefty writedowns, and slashed hundreds of jobs.

Universal Ballots: Icahn Scores in Board Battle
" Wall Street Journal (06/20/18) Cutter, Henry"

Carl Icahn won a majority of seats on the board of SandRidge Energy (SD) in one of the highest-profile battles to use universal ballots. Icahn, the company's largest investor with a stake of 13.5%, sought to replace the entire board with his own nominees, but ultimately won four seats. Universal ballots allow investors to select a mix of nominees backed by either side, with proponents saying they have the potential to improve shareholder democracy. However, the SandRidge vote emphasizes the complications that accompany universal ballots. Glass Lewis & Co. and Institutional Shareholder Services Inc. recommended shareholders back some of each side's nominees. However, SandRidge accused Icahn of urging shareholders to move votes from candidates supported by the proxy advisers to those who were not, which the company said was intended to take advantage of all the names being on the same card to give Icahn control of the board. Meanwhile, Icahn said the company appeared to be complaining that shareholders could use the universal ballot as intended: to vote for their own combination of nominees.

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 Wins Majority on SandRidge Board
" Wall Street Journal (06/19/18) Lombardo, Cara"

SandRidge Energy Inc. (SD) announced Tuesday that Carl Icahn won four board seats in a shareholder vote, and it agreed to give him a fifth after another was too close to call. SandRidge held on to three seats after reaching a deal with Icahn to expand the board by one. Icahn, who has criticized the oil-and-gas company's deal making and executive pay, had sought to replace the entire board with his own nominees. He is SandRidge's biggest investor with a roughly 13.5% stake. It is rare for investors to succeed at overhauling an entire board, and it is even unusual for them to win control of a board as Icahn has at SandRidge. The billionaire has done so through a proxy fight only four times in his career, according to activist research firm 13D Monitor. The SandRidge fight was also closely watched because it was one of the highest-profile proxy fights so far to use so-called universal ballots, which allow investors to select a mix of nominees backed by either side. SandRidge on Monday accused Icahn of urging shareholders in private meetings to reallocate their votes from candidates supported by proxy advisers to those who weren't, a move the company said was meant to take advantage of all the names being on the same card to give him control of the board. Icahn responded that SandRidge seemed to be complaining that shareholders could use the universal ballot as intended—to vote for their own combination of nominees.

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.”

Pershing Square Analyst Brian Welch to Leave Company
" Reuters (06/19/18) Herbst-Bayliss, Svea; Vijayaraghavan, Abinaya"

Pershing Square Capital Management LP said June 19 that Brian Welch, who led research efforts on Automatic Data Processing Inc. (ADP), one of the firm's recent investments, is exiting the company. Welch's exit comes months after Ackman told investors that he is shrinking the firm. Pershing Square said its investment in ADP will continue to be overseen by Ackman and two other analysts. Pershing Square said its stake in ADP has generated a total shareholder return of about 35% and that it will continue to be an engaged stakeholder.

Icahn Gains Control of Board in Proxy Fight at SandRidge Energy
" Reuters (06/19/18) Brandes, Heide; McWilliams, Gary"

On June 19, shareholders of SandRidge Energy (SD) elected four of Carl Icahn's seven-person director slate and two nominees put forth by the oil and gas company, preliminary results show. Icahn earned another victory as shareholders rejected SandRidge's poison pill and executive compensation plan. Icahn owns a 13.6% stake in the company. From his slate, shareholders elected Jonathan Christodoro, John Lipinski, Bob Alexander, and Randolph Read. In addition, they approved existing SandRidge directors Sylvia Barnes and William Griffin Jr.

Delaware's Feared Litigator Rounds on State's Judges
" Financial Times (06/19/18) Indap, Sujeet"

Stuart Grant, considered the most feared corporate lawyer in Delaware, is retiring from his firm Grant & Eisenhofer later this month. His legal work has helped expand shareholder rights and secured investor victories over corporate leaders like Hank Greenberg and Mark Zuckerberg. In a recent interview, he criticized Delaware's judges and legislators for kowtowing to corporations and recent decisions that shield most mergers and acquisitions from litigation. "Delaware has understood all along...that we have to be protective of our corporations, but it was never protective at the expense of the shareholders," he said. However, he noted that activist investors cannot alone police companies. "I'm not sure that institutional investors fully understand how the courthouse door has effectively been slammed in their face. And they do not have a viable alternative of the ballot box," he said.

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.

AutoCanada Launches Strategic Review After Clearwater Capital Management's Request
" Globe and Mail (06/18/18)"

AutoCanada Inc. announced that its board of directors has appointed a special committee of independent directors to review strategic alternatives following a request by Clearwater Capital Management. The auto dealership group says the special committee will review options to maximize shareholder value. Clearwater had raised concerns about the company's poor first-quarter margins and indicated that it might be an attractive acquisition target.

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."

Fujifilm Sues Xerox Over Aborted Merger, Seeks More Than $1 Billion
" Reuters (06/18/18) Stempel, Jonathan"

On June 18, Fujifilm Holdings Corp. filed suit against Xerox Corp. (XRX) for more than $1 billion plus punitive damages for abandoning a proposed $6.1 billion merger due to pressure from investors Carl Icahn and Darwin Deason. It also is seeking a declaration that Xerox owes it a $183 million fee for terminating the deal, which would have merged Xerox into the companies' Asia joint venture Fuji Xerox and given Fujifilm 50.1% of Xerox's common stock. Fujifilm accused Xerox of engaging in "intentional and egregious conduct" in calling off the merger after reaching a settlement with Icahn and Deason that handed control to new management. Xerox CEO Jeff Jacobson stepped down as part of the settlement with the investors, who argued that the merger undervalued Xerox.

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."

Mellanox Nears Truce With Starboard Over Board Seats—Sources
" Reuters (06/17/18) Baker, Liana B.; Herbst-Bayliss, Svea"

Sources said on June 17 that Mellanox Technologies Inc. (MLNX) is nearing a deal with Starboard Value LP over the makeup of its board of directors. The agreement follows the chipmaker's move last month to adopt corporate governance changes that affect how investors select directors in contested board elections. The sources indicated that Mellanox could announce an agreement as early as this week to avoid a proxy fight with Starboard—which owns about 11% of the company—at its July 25 shareholder meeting. They noted that the settlement would involve naming two directors from Starboard's eight-person slate to Mellanox's board, and another director would be agreed upon later between the two parties and added to the board. However, the 11-member board will not be expanded, according to the sources. Further, Mellanox Chairman Irwin Federman will remain in place, but Starboard portfolio manager Peter Feld will not be added to the board. The sources added that the settlement includes a standstill agreement that requires Starboard to support the board and company for at least a year.

Stobart Investor Neil Woodford Calls for Chairman to Resign
" Reuters (06/18/18) Jessop, Simon"

Stobart's second-largest shareholder, Neil Woodford, reiterated his call for a board shakeup on Monday.  The investor said Chairman Iain Ferguson should step down and once again proposed the election of Scottish businessman Philip Day to the board—a move backed by other shareholders as well.  The board has already removed director and former CEO Andrew Tinkler following recent arguments.  Woodford said a new chairman was necessary to restore stability and “ensure that shareholder value creation continues in the manner that we have become accustomed to.”  Day had “extensive experience managing and leading diverse businesses in challenging environments whilst delivering excellent returns to shareholders,” said Woodford.  “I believe he will be a very strong and effective leader of Stobart Group at a time when the business needs just that. Ultimately, I would like him to become Chairman but that will be up to the Board to decide.”

Blue Lion Capital Ratchets Up Rhetoric by Pressing HomeStreet to Sell
" American Banker (06/15/18) Stewart, Jackie"

Blue Lion Capital said on June 15 that management of HomeStreet (HMST) should develop a "comprehensive operating plan" to become a top-performing bank instead of "continuing to announce piecemeal and reactionary cost reductions." The investor said executives should hire an investment bank and put HomeStreet up for sale if improvement is unattainable, noting that "either way, shareholders would finally be rewarded." Among other things, Blue Lion criticized the bank's recent move to close 18 mortgage offices and cut jobs to save $13.1 million annually, calling the plan inadequate. According to the investor, HomeStreet should close any mortgage lending office that is unable to earn its cost of capital, and sell its single-family mortgage servicing rights. Further, Blue Lion asked shareholders to reject two HomeStreet director nominees and vote against a nonbinding advisory proposal on executive pay.

Ranger Direct Chairman Resigns in Boardroom Exodus
" Citywire (06/18/18) Lumsden, Gavin"

Ranger Direct Lending (RDL) announced that Chairman Christopher Waldron will resign before the company’s annual general meeting (AGM) on Tuesday, after clashing with shareholders Oaktree and LIM Advisors over his handling of the company’s strategic review earlier this year.  The embattled investment company—which last week announced it would wind up and return money to shareholders—said two other directors will also step down.  The resignations give Oaktree and LIM, which own nearly 29% of its shares, the board overhaul they wanted as RDL prepares for the long task of winding down its badly performing portfolio.  Shareholders will also vote Tuesday on whether to reappoint Jonathan Schneider—the only original director still on the board—alongside votes for the four new non-executives that Oaktree and LIM have proposed.  Waldron had resisted winding up RDL and had not included it as an option in its strategic review, which upset Oaktree and LIM. However, he and the board were forced to back track last week after Ares Credit, the fund manager they had appointed to replace Ranger, announced it would not take up the role, put off by the shareholder pressure.

Rent-A-Center Is Sold: Retailer Accepts $15 Offer From Vintage Capital
" Dallas Morning News (06/18/18) Halkias, Maria"

Rent-A-Center Inc. (RCII) has agreed to be taken private by Vintage Capital in a transaction valued at approximately $1.4 billion. Vintage will pay $15 per share for the rent-to-own company. The deal is expected to close by the end of the year. The $15 price equates to a premium of 49% over Rent-A-Center's closing price on Oct. 30, 2017, prior to the announcement that its board was evaluating strategic options. The board, which includes seats controlled by Engaged Capital which started calling for a sale in 2016, unanimously approved the transaction.

SandRidge Says Approached by 17 Potential Buyers, Including Icahn
" Reuters (06/15/18) Chatterjee, Laharee; P, Akshara"

On June 15, SandRidge Energy Inc. (SD) disclosed that it had been approached by 17 potential bidders for a buyout, including billionaire investor Carl Icahn. Icahn has criticized the company's leadership and currently is fighting for control of the oil and gas producer's board, nominating a slate of seven directors. "Some investors tip their hat to an Icahn-lead board, as that might offer a quicker and possibly greater gain," said Coker Palmer International analyst David Beard. "But it also seems that both management and Icahn want a higher stock price. Either way, shareholders should win." SandRidge's stock has gained about 18% since Icahn disclosed his buyout interest in April.


Investors Are Engaging Bigger Companies in Europe
" Bloomberg (06/24/18) Pham, Lisa"

A report from Alvarez & Marsal Inc. (A&M) reveals that investors are engaging with bigger companies in Europe, and those in the United Kingdom are most at risk of intervention. According to an analysis of 1,715 firms by the restructuring consultant, the average market capitalization of companies being engaged by investors jumped 6.7% from $16.5 billion in a September report to $17.6 billion, versus a gain of just 1.3% for the U.K. FTSE All Share Index over the same period. The report shows that more than a third of the companies at risk are located in the United Kingdom. "One phenomenon that we are seeing is 'wolf packs' of like-minded investors, who are pooling their strength to force a debate with management," said Malcolm McKenzie, a managing director at A&M in London. "It is becoming clear that they are forming more easily and more quickly, and increasingly they are setting their sights on larger companies." The report adds that consumer, industrial, and information technology companies are more likely to be engaged by investors, while the recovery in oil prices has made energy firms less attractive.

Corporate Political Disclosure Moves Firmly Into Mainstream
" Pensions & Investments (06/25/18) Croce, Brian"

As of mid-June, ISS Analytics reports that 85 shareholder proposals were filed seeking disclosure on political or lobbying spending. Of those, 13 have been challenged by companies, with the Securities and Exchange Commission granting two no-action letters related to procedural grounds. In one case, the proponent failed to meet requirements for ownership of stock, and the other was deemed duplicative because the issue already had been proposed. ISS notes that 23 of the 85 proposals earned more than 30% of shareholder support, but none received majority support this year. According to the Center for Political Accountability (CPA), 295 S&P 500 companies voluntarily disclosed at least some information related to political spending without a proxy vote in 2017, on par with 2016. "Political disclosure and accountability is now seen as the norm," said CPA President and founder Bruce Freed. "It's something that companies are expected to do." So far this year, 12 proposals have been withdrawn, compared with 20 in 2017 and 23 in 2016. John Roe, managing director and head of analytics at ISS, said, "Generally, it's a pretty good sign when we see withdrawals happen. It means there was productive engagement." Amy Borrus, deputy director for the Council of Institutional Investors (CII), said that if a company spends shareholder money on political activities, "there should be appropriate board oversight and transparency to ensure that the political spending is consistent with long-term shareowner interests." CII urges corporate boards to develop and disclose guidelines for approving political contributions; monitor and approve all contributions, including those to trade associations and other third parties; and disclose the amounts and recipients annually.

Waiting for Peter Thiel: Big Tech Directors Miss Shareholder Meetings
" Reuters (06/24/18) Kerber, Ross"

Some small investors who want to voice their concerns to big technology company directors are missing out, because many board members are skipping annual shareholder meetings. Although corporate governance consultants recommend board members attend annual meetings, companies that hold meetings online have some of the worst attendance records. Looking at individual firms, a substantial portion of Alphabet Inc. (GOOGL), Facebook Inc. (FB), and Twitter Inc. (TWTR) directors have not attended annual shareholder meetings in recent years, company records show. Recent high-profile no-shows include Alphabet CEO Larry Page and Facebook board member Peter Thiel. While large asset managers can get access to directors, governance experts and shareholder activists say the empty seats at annual meetings mean small investors and campaigners challenging directors to make changes may not get to engage with boards.

Investors Are Right to Consider ESG Risks, Says New Report by Corporate Governance Association
" Forbes (06/22/18) Knutson, Ted"

Investors should weigh environmental, social, and governance (ESG) risks because they can effect the worth of intangible assets which make up more than 80% of company value, according to a new report by the Society for Corporate Governance. The intangible assets that could be subject to ESG concerns range from brand names and reputation to top managers and technological know-how. For years, ESG investing was limited to a small set of investors. But it has more recently expanded to mutual funds, exchange-traded funds, and private equity. The largest passive investors globally, including BlackRock (BLK) and the $1.4 trillion Government Pension Fund of Japan, have embraced ESG in both their marketing and risk management practices.

Recruit More Women Directors to Avoid Engagement by Activist Investors
" Financial Times (06/23/18) Mooney, Attracta"

An analysis by the Alvarez & Marsal consultancy found that European businesses that have more female directors are less likely to be engaged by activist investors. The study of 1,854 public groups showed that companies not engaged by hedge fund activists had, on average, 13.4% more women on their boards. Several studies have found that companies with diverse management perform better. For example, index provider MSCI found that companies with more women board members delivered a 36% better return on equity.

Why Shareholder Activism Is Growing at Public Companies, and How It Works
" Washington Business Journal (06/22/18) Proctor, Carolyn M."

Activist investors once engaged only failing companies, but today the investment strategy has become more common. Experts say the trend likely will increase, particularly for companies in the technology and government services sectors. Investors have put an emphasis on shareholder value since the financial crisis. "There's almost no industry that has been immune. Almost every industry has been targeted...And today, even a healthy, well-performing company could be an activist target, particularly if the activist sees some opportunity to unlock shareholder value that the company may not be pursuing," said Keith Gottfried of Morgan, Lewis & Bockius LLP. "The beauty of the activism is that an activist investor gets in there without paying a premium—they just pay whatever the stock is trading on the open market. They can exit on the open market or maybe they can get the company to put itself into play, and they can sell their shares pursuant to a transaction. And they get the premium when the company is sold." Activism often comes to light through Form 13Ds that indicate when an investor acquires at least 5% of a company's stock, but experts say private interactions behind closed doors and away from regulatory scrutiny increasingly are becoming popular. "There is often no sign in regulatory filings or even in the media that these discussions are happening," said Jason Frankl, who heads FTI Consulting Inc.'s Activism and M&A Solutions practice. "They're quiet, they're private, and it's very difficult to be able to quantify how many of them are going on when really there's no public record. The noise among the advisers, though, would suggest to you that is happening more frequently." He added, "Sometimes even the disclosure there's an activist investor in the stock can move the stock fairly dramatically. Our friends at Elliott Advisors show up in stocks every week, and typically when they do, you'll see that stock rise."

Hedge Funds Scale Learning Curve in Germany to Recast Industry
" Handelsblatt (06/22/18) Köhler, Peter; Landgraf, Robert; Schnell, Christian"

U.S. hedge funds and other investors have overcome a steep learning curve to master Germany's corporate landscape, learning, among other things, to take seriously the co-determination of labor and capital on company boards and that minority shareholders have more leverage in German companies. Cevian and Elliott Management have pressured ThyssenKrupp CEO Heinrich Hiesinger to extract more value from the spinoff of the firm's steel division. Pressure from these and other investors has spurred a boom in mergers and acquisitions (M&As), as they prefer companies focused on a core activity, pushing management to divest marginal activities, acquire other companies to strengthen the core, and become a leader in that industry. Experts say this has transformed entire sectors in Germany, and helped push M&A volume to a record €187 billion ($217 billion) in the first half of the year. "Experience shows that established activist funds are primarily looking for larger companies, since their strategies require liquidity in the shares in order to build up a substantial position and later not to be trapped," said Birger Berendes, head of German M&A at Bank of America Merrill Lynch. Goldman Sachs partner Alexander Mayer adds, "Activists catalyze and communicate the dissatisfaction of shareholders. This will fuel M&A and other portfolio activities."

Women on Track to Gain Record Number of Board Seats
" Wall Street Journal (06/21/18) Fuhrmans, Vanessa"

According to an analysis of corporate filings by ISS Analytics, women accounted for 248, or 31%, of new board directors at the 3,000 biggest publicly traded U.S. companies during the first five months of the year, marking the highest percentage in at least a decade. This means 2018 is on pace to be a record year for new female board members, with observers attributing the gains in part to shareholder pressure and the #MeToo movement. State Street Global Advisors and BlackRock Inc. (BLK) are among the large investors pressuring companies to diversify their boards, even voting against certain board members at firms with all-male boards. However, the ISS analysis also found that companies have not propelled women directors at the same rate into leadership roles in the boardroom. While women account for 18% of board seats at the 3,000 biggest companies, they account for just 10% of lead independent directors and 4% of board chairs. Among other things, the analysis found that women entering the corporate boardroom often have a greater set of skills and qualifications than their male counterparts, in part because boards increasingly are seeking new directors with specific expertise. "It shows there are plenty of qualified women out there," said John Roe, head of ISS Analytics.

Marriage Is Out of Fashion. So Why Is Tiffany Selling More Engagement Rings?
" Wall Street Journal (06/20/18) Kapner, Suzanne"

Jana Partners played a role in the CEO change at Tiffany & Co. (TIF) that has given the jeweler a boost. The investor built up a 4.9% stake in Tiffany last year and reached a deal with the company to add three new directors to its board. Alessandro Bogliolo, a retail industry veteran, took over as Tiffany's chief executive in October. "You have a CEO who brings out the best in people," said Scott Ostfeld, a partner at Jana, which has since reduced its stake to about 2.86%, according to the latest filings. Bogliolo, a former Bulgari executive who was most recently CEO of clothing company Diesel, is encouraging executives to take risks, says Erwan Rambourg, an HSBC managing director. Under Bogliolo, Tiffany's has utilized more inclusive ads, edgier marketing, and more of its signature blue. Tiffany's comparable sales from e-commerce and stores open at least 12 months rose in the most recent holiday period, the first quarterly gain since October 2014. The strong results have pushed Tiffany's stock to all-time highs, with its shares currently changing hands above $136, up from about $90 a year ago.

Study: Tax Havens and Limited Regulation Increase Risk for Shareholders
" EurekAlert! (06/19/2018)"

Companies incorporated in tax havens are more likely to engage in practices that benefit executives at the cost of their shareholders if they are also headquartered in countries with limited shareholder protections, according to new research from North Carolina State University and the University of Arkansas. Researchers examined data on more than 14,000 publicly held companies. They evaluated information on 1,127 companies that are incorporated in tax haven countries—of which 874 had their headquarters in weak governance countries. Researchers report that tax haven companies headquartered in weak governance countries paid an average of 83% less in dividends to their shareholders, as compared to other companies in weak governance countries with similar tax avoidance levels. In contrast, tax haven companies with headquarters in well regulated countries passed on tax savings to their shareholders. Moreover, tax haven companies in weak governance countries performed an average of 53% lower than other companies in weak governance countries with similar levels of tax avoidance, while the performance of tax haven companies in well regulated countries was comparable to their peers. "One take-away here is that incorporating a company in a tax haven country can benefit shareholders, but is much less likely to do so if the company is headquartered in a country that doesn't take steps to protect shareholder rights," said Christina Lewellen, an assistant professor of accounting at NC State and co-author of a paper on the work.

VW Under Pressure on Governance
" Financial Times (06/19/18) McGee, Patrick"

The boss of Volkswagen's luxury Audi brand, Rupert Stadler, was arrested on June 18 for his alleged role in the diesel scandal. On June 19, VW announced a new interim chief executive, Audi board member and sales chief Abraham Schot. However, the company's top directors could not bring themselves to dismiss the chief executive even as he sat in custody and instead, the decision was made based on Stadler's own request to step down. Governance experts interpreted this as another sign that directors are unwilling to make bold reforms. Many analysts say the core of VW's cultural problem is that its supervisory board comprises mainly labor unions, the Lower Saxony government, and the Porsche-Piech family who own 52% of voting rights in the carmaker. The structure is so rigid that even when a chief executive, chairman, or compliance chief seeks to introduce major changes, it is not clear they have the power to do so.

Boardroom Diversity Moves Forward in Japan
" Nikkei Asian Review (Japan) (06/19/18)"

Toyota Motor recently appointed its first female board member, and Sony (SNE) is poised to add a third foreign-born director. Japanese companies are promoting ethnic and gender diversity, a movement that has gained the support of institutional investors who value new ways of thinking. "Ensuring boardroom diversity is important," says Emi Onozuka at Goldman Sachs Asset Management. Nearly seven in 10 large corporations expect to have at least one non-Japanese or female director after shareholder meetings in June. Assuming shareholders approve all of the nominations, 112 companies will have at least one female director or auditor, marking 66% of the total, up seven percentage points from a year earlier. Of the 170 Nikkei Stock Average components with March book-closings that had published shareholder meeting notices by the end of May, 36 will have non-Japanese directors, an increase of seven, according to Takara Printing. In updating its corporate governance code earlier this month, the Tokyo Stock Exchange urged listed companies to push for greater ethnic and gender diversity on their boards.

How to Get More Women on Asia's Boards? Go Beyond Number Counting
" Forbes (06/19/18) Loh, Lawrence"

Female representation on the boards of large companies in Asia ranges from about 2% to 19%, with South Korea and Japan having the lowest at 2.6% and 4.5%, respectively. In the Western world, female representation is much higher, but many Western countries have mandated gender participation for their corporate boards. One could infer from the European results that you get what you mandate, but it is not clear that gender quotas would alleviate the problem of entrenched male dominance in Asia, writes Lawrence Loh, an associate professor and director of CGIO at National University of Singapore Business School. The cultural context is strong in Asia, and female quotas would carry a stigma that would not be helpful. Instead, "companies should create conditions that are conducive for women to be appointed in leadership positions based on their capabilities," according to Loh. Companies should take a holistic approach to the problem by examining not just board seats, but also the process of sourcing and assessing candidates. Low female representation is due to the broader culture, but also results from specific corporate practices, such as tenure of independent directors. "If we deal with these properly, the numbers will take care of themselves," concludes Loh.

Goldman Sees Buybacks as Japan Inc. Sells Off Shares After AGMs
" Bloomberg (06/19/18) Redmond, Tom"

Shareholders have filed a record number of proposals at Japanese annual general meetings this year, which could have positive consequences for investors, according to Goldman Sachs Group Inc. There were seven proposals this AGM season urging companies to reduce cross-shareholdings, according to Goldman—more than double the number of such proposals last year. The brokerage expects more companies to sell cross shareholdings, which could lead to increased dividends and buybacks. Even getting “significant” shareholder support could be a catalyst for change, the researchers said. After Japan introduced a revised corporate governance code this year requesting that companies disclose their plans for offloading cross-shareholdings, it has become more difficult to justify the holdings based on reasons such as maintaining relationships with other firms, Goldman noted. “Companies will also need to receive approval for their strategic shareholdings,” the researchers wrote in a note dated June 18. “We think most shareholders are unlikely to give their consent without a logical investment-based justification contributing to shareholder value.” Goldman says it will be watching proposals such as Asset Value Investors Ltd.'s call for Tokyo Broadcasting System Holdings Inc. to sell and return to shareholders about 40% of its stake in Tokyo Electron Ltd. “We think a high approval rate for cross-shareholding related proposals could spark a catalyst for future change in corporate behavior,” the analysts wrote. “We broadly expect companies to reduce holdings of publicly traded equities in the coming year,” they added.

In SandRidge Proxy Fight, Icahn's Reputation for Turnarounds at Stake
" Reuters (06/15/18) McWilliams, Gary"

On June 19, shareholders of SandRidge Energy Inc. (SD) will cast their votes for directors, and they will have to determine how much control they will give to Carl Icahn, whose hedge fund owns a 13.6% stake in the company. Under the formula set by the board, Icahn is assured at least two of seven board seats, and observers note that he is staking his reputation by pushing for a straight vote on his seven-person director slate. According to Coker Palmer International analyst David Beard, he could win three or four seats with the support of many of its largest shareholders, activists, or distressed company investors. Thomson Reuters data indicates that institutions including Icahn's hedge fund, Fir Tree Partners, Paulson & Co., Guggenheim Capital, and Apollo Capital hold 88% of SandRidge's stock. Although Icahn has support for three board seats from Institutional Shareholder Services and Glass Lewis & Co., SandRidge has attacked his board slate in a series of shareholder letters. The company has argued that his losses from $7 billion in past energy company investments total $540 million and that Icahn wants to "gain control of SandRidge without paying an appropriate premium." Meanwhile, Beard added, "Whether he wins two seats or all the seats, there is no magic switch that he can flip to drive shareholder value in the short term."

Lessons from Europe: How to Get More Women on Corporate Boards
" Fortune (06/15/18) Kowitt, Beth"

U.S. boardrooms—where only about 20% of corporate directors are female—could take a lesson from Europe, where the momentum behind adding women to boards has picked up steam. At Fortune’s MPW International Summit in London, women leading the push to diversify European boards shared their strategies. Sophie L’Helias, co-founder of International Corporate Governance Network, has a philosophy that comes from her time in the activist hedge fund industry. “I believe in numbers,” she said. But when it came to gender in the workplace, she did not feel like the data was out there. She thus started LeaderXXchange, an organization whose mission includes promoting diversity in governance, leadership, and investment. LeaderXXchange recently launched the Gender Diversity Exchange, a database that not only tracks what companies announce in regard to their gender policies, but whether they are meeting their targets. The tool also looks beyond boards to diversity in the c-suite and management, as well as the trends over a five-year period. Helena Morrissey, head of personal investing at Legal & General Investment Management, founded the 30% Club to push U.K. companies to have 30% of their boards comprised of women by 2010. The investor and institutional asset manager has been voting against the chairs of boards of FSTE 350 companies whose boards are not at least 25% women. Last year, that resulted in the company voting against 37 board chairs in the U.K.

Asset Managers Pressure Japan's Board Appointments
" Nikkei Asian Review (Japan) (06/14/18) Wada, Taizo"

As Japan's shareholders meeting season approaches, asset managers are urging companies to hire more outside board members and reduce cross-shareholdings as conditions for voting for proposed appointments. The Tokyo Stock Exchange's (TSE) governance code urges listed companies to hire at least two independent outside board members and although most companies listed on the TSE's first section have two or more such members, critics say their governance systems are still inadequate. Because of this, JPMorgan Asset Management has decided to oppose appointments of presidents and other representative directors if outside members do not make up at least one-third of the board. Additionally, Mitsubishi UFJ Trust and Banking will oppose the appointment of all board members if companies do not have at least two outside directors.

Two Corporate Governance Mechanisms: Activism and Hostile Takeovers
" London School of Economics Business Review (06/12/18) Burkart, Mike; Lee, Samuel"

New research from London School of Economics professor Mike Burkart and Samuel Lee, an assistant professor of finance at Santa Clara University's Leavey School of Business, compares shareholder activism with hostile takeovers. Their key insight, when examining takeovers and activism in isolation, is that the prospect of larger value improvement in an engaged firm raises the takeover premium more than net surplus, but also makes an activist campaign more rewarding relative to its costs. Thus, activism becomes more profitable as takeovers become too "expensive," and more valuable campaigns also are more profitable but tender offers with larger surpluses yield smaller bidder returns. Burkart and Lee show that the legal risk of a price revision has opposite effects on activism and hostile takeovers; in takeover activism, it merely reinforces ex post free-riding. As a result, activists are better off acting as control brokers, rather than using control to implement value improvements on their own. When considering the two governance mechanisms as feasible alternatives, the research shows the potential of a tender offer erodes activists' incentives and reduces campaign profitability, making takeover activism the only relevant alternative. Implications for takeover activism from the theoretical analysis are higher returns over other forms of activism while enabling takeovers that otherwise would not occur and replacing some tender offers with more efficient mergers.

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