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Barrick Gold Is the Undisclosed Bidder for Detour Gold
" Bloomberg (07/20/18) Deveau, Scott; Bochove, Danielle"

Sources say Barrick Gold Corp. (ABX) is the undisclosed gold miner that was asked to sign a confidentiality agreement along with investor John Paulson to discuss potentially buying Detour Gold Corp. However, the sources note that neither party signed the agreements, and that Paulson previously held discussions about Detour with Barrick, whose level of interest in Detour is unclear. Paulson's hedge fund, Paulson & Co., is embroiled in a dispute with Detour and is pressuring the miner to sell itself. On July 19, Paulson said it plans to call a special shareholder meeting to replace most of Detour's board. In a statement on July 20, Detour said it planned to announce two new directors with operational expertise in large-scale open pit mining and corporate social responsibility, and it will remain open to strategic alternatives that create greater value than its own current plans. According to TD Securities Inc. analyst Daniel Earle, "With respect to Paulson's effort to replace the board of directors with a new slate that would pursue strategic alternatives, we believe that Paulson has the votes to requisition a shareholder meeting. We do not believe that a dissident group will have sufficient votes to be successful."

UPL Buys Agrochemicals Unit From Platform Specialty for $4.2 Billion
" Financial Times (07/20/18) Platt, Eric"

On July 20, UPL agreed to purchase a unit of Platform Specialty Products (PAH) for $4.2 billion. The deal, influenced by William Ackman, whose hedge fund Pershing Square Capital Management owns about 14% of Platform, will bolster UPL's offerings of pesticides for farmers. Slated for completion by early 2019, the deal will see Platform split in two as the company refocuses around its speciality chemicals business for the electronics and industrials markets. The company plans to change its name to Element Solutions and its stock symbol to ESI after the transaction is finalized.

Aussie Tycoon Hammers Home Overboarding Message
" Reuters (07/20/18) Goldfarb, Jeffrey"

Australian gambling tycoon James Packer has resigned from 22 directorships after quitting the board of casino operator Crown Resorts for mental health reasons, reminding companies across the globe about how stretched executives can be. The backlash against such "overboarding" is increasing, particularly because evidence indicates returns can suffer. It takes an average of 275 hours a year to prepare for and attend meetings on just one board, according to the National Association of Corporate Directors. Institutional Shareholder Services recommends investors vote against or withhold support from directors who sit on five or more boards, and it is tracking more than 50 directors who sit on at least 10 boards. These include Liberty Media CEO Greg Maffei, Mawson Resources CFO Nick DeMare, and AsiaLink Capital Chairman Fan Renda. BlackRock (BLK) has recently highlighted the issue, challenging directors at Pfizer (PFE), AvalonBay (AVB), and dozens of other companies for overextending themselves. Meanwhile, a study by consultancy Equilar found that companies whose CEOs hold no more than one external directorship generated a one-year median shareholder return of more than 15%—assuming dividends were reinvested—while CEOs serving on multiple boards generated returns of approximately 8%.

The Morning Risk Report: More Boards Getting Compliance Training
" Wall Street Journal (07/20/18) DiPietro, Ben"

According to a survey of about 1,200 executives by Navex Global, 73% of respondents said they now provide compliance training to their boards, up from 44% in 2017 and 58% in 2016. However, 44% of respondents said their company's directors never received training on sexual harassment, and a lack of training was cited by 25% regarding the code of conduct or cybersecurity, 23% on conflicts of interest, and 20% on bribery or corruption. "Sexual harassment is not a new issue and it's one that reaches the top echelons of organizations, harming value and reputation when allegations surface," said Ingrid Freeden, vice president of learning content at Navex Global. "Many boards are not trained on important topics and limited training is far from adequate. Given directors' oversight responsibility for organizational culture and behavior, critical topics should be addressed more regularly." Meanwhile, creating a culture of ethics and respect ranked first among training objectives, surpassing complying with laws and regulations, which ranked first last year. "The most mature program leaders have moved beyond regulatory alignment and on to tackling ethics and compliance objectives through multiple channels with a broader approach," Freeden said.

Shareholder Lawsuits Over M&A Deals Are Declining
" CFO.com (07/18/18) McCann, David"

An unpopular business practice among investors is when companies provide little information about planned M&A deals. Last year, shareholders initiated class-action litigation in response to 73% of public companies' announced deals valued at more than $100 million, according to a new report from Cornerstone Research. However, shareholders' appetite for such lawsuits has actually declined over the past two years. Between 2009 and 2015, investors challenged more than 90% of such M&A deals, Cornerstone reports. The average number of lawsuits per deal dropped from 4.1 in 2015 to 2.8 in both 2016 and 2017. And the percentage of cases voluntarily dismissed by plaintiffs rose from an average of 26% from 2013 through 2016 to 52% in 2017, according to Cornerstone. This trend stems from a January 2016 decision by the Delaware Court of Chancery to severely restrict its approvals of "disclosure-only" settlements in such cases. For several years before 2016, deal litigation typically was settled quickly, with defendants agreeing to provide supplemental disclosures about the challenged deal and pay plaintiffs' attorney fees. In exchange, plaintiffs agreed to release the defendants from other disclosure-related and breach-of-fiduciary-duty claims that shareholders may have had against them. This changed after In re Trulia Inc. Shareholder Litigation, where the Delaware Chancery Court re-examined the merits of these settlements. The result, BakerHostetler notes, "was a new test that limited the viability of disclosure-only settlements to very narrow circumstances and virtually foreclosed the practice of including unreasonably broad litigation releases to defendants."

Hedge Fund Elliott Raises Stake in Japan's Alpine
" Reuters (07/19/18) Fujita, Junko; Wilson, Thomas"

Elliott Management has upped its holding in Alpine Electronics Inc. to 6.3%, a week after disclosing a roughly 5% stake in a filing that said it could make “significant proposals” to the components maker. The latest move could add pressure on the Japanese company to reward minority shareholders. Elliott's share purchase also comes as Oasis Management, which owns a nearly 10% stake in Alpine, attempts to prevent the sale of Alpine to larger affiliate Alps Electric Co. Ltd., arguing the sale price is low. Oasis has struggled to persuade management and other shareholders on the issue, and its proposal was rejected at Alpine's annual general meeting in June. It is unclear whether Elliott's objective is aligned with that of Oasis. Elliott has a track record of buying stakes in companies that are in the middle of an acquisition or takeover and forcing a better deal for shareholders. Most recently in Japan, Elliott built up a stake in Hitachi Kokusai Electric Inc after which suitor KKR & Co. (KKR) raised its price before completing a takeover.

Hatchets Buried as Speedy Hire Names Chairman
" The Times (London) (07/20/18) Lea, Robert"

Speedy Hire announced it has appointed David Shearer as chairman, two years after a failed campaign to oust current chairman Jan Astrand. The company found itself under pressure at the time from Toscafund, then its largest shareholder. Toscafund’s founder Martin Hughes had wanted a merger with its competitor HSS, in which the hedge fund also had a substantial stake. A campaign to fire Astrand failed, but Hughes's resolution to appoint Shearer to the board succeeded. At the time, Shearer's election as a director was seen a brazen attempt by Hughes to attempt to destabilise Astrand. Shearer's arrival initially led to several awkward board meetings, according to sources, but all hatchets reportedly have been buried and Shearer gets along especially well with Speedy's CEO Russell Down, the architect of its recovery over the past two years. Toscafund is no longer a shareholder. In a statement Astrand indicated the change of tone, saying Shearer had become a “valued member” of a board that had made use of his “considerable external experience.” He added: “I am confident in his ability to lead the board in building on the solid foundation established during Speedy's recovery and helping achieve the next stage of its growth.”

Paulson Takes on Tiny Toronto Gold Miner
" Wall Street Journal (07/20/18) Ramkumar, Amrith"

John Paulson's hedge fund is zeroing in on Detour Gold Corp. (DGC), a small Toronto-based gold miner that in April slashed its 2018 free cash flow guidance in half. A battle between the two sides heated up this week over differences on strategy. Paulson & Co. owns 5.4% of Detour shares and wants the company to formally explore strategic alternatives, including a sale. “We're not advocating for a fire sale, we're saying, 'Go see what all the options are,'” Paulson partner Marcelo Kim said in an interview. Other Detour investors including Van Eck Associates, Franklin Templeton Investments and Coast Capital Management said they would also back a formal review of Detour's options. The company has different ideas for how to improve its performance, preferring a plan for a key mine it operates and accusing Paulson of trying to profit from “an ill-timed fire sale.” Detour says it is committed to its latest mine plan but open to “value-accelerating opportunities.” On Thursday, Paulson requested a special shareholder meeting to replace most of Detour's board, and Detour threatened litigation.

Comcast Concedes to Disney in Bidding War for Fox Assets
" Reuters (07/19/18) Baker, Liana B.; O'Donnell, Carl; Vengattil, Munsif"

On July 19, Comcast Corp. (CMCSA) announced that it has withdrawn its $66 billion bid for the entertainment assets of Twenty-First Century Fox Inc. (FOXA), conceding to Walt Disney Co. (DIS), which sweetened its offer for the Fox assets to $71.3 billion last month. However, Comcast said it would still seek to acquire European broadcaster Sky Plc to expand its international footprint. This leaves the door open for a potential bidding war for Sky, with Fox having made an offer to acquire the 61% of the company that it does not own. Even so, Comcast currently is the highest bidder with a 14.75 pounds-per-share offer, worth $34 billion. After news that it dropped its Fox bid, Comcast shares rose 3%; Disney shares climbed 3% as well. Sources say one reason Comcast withdrew its bid was that the bidding war was inflating the value of Sky, given its partial ownership by Fox.

Paulson & Co. to Ask Detour Gold for Special Meeting for Board Overhaul
" Reuters (07/19/18) Benny, John"

John Paulson's hedge fund, Paulson & Co., said on July 19 that it would encourage Detour Gold Corp. to call a special shareholder meeting to replace a majority of the Canadian gold miner's directors. The statement comes a day after the firms engaged in a heated public exchange over Detour's failure to publicly disclose a buyout offer. According to Detour, it did not disclose the buyout offer to Paulson because a third party had already informed him about it. Meanwhile, Detour asked the Ontario Securities Commission to investigate Paulson, which has a 5.4% stake in the company, for "concerning and unlawful behavior" after the hedge fund issued a statement disclosing the buyout offer.

New Chairman for Wincanton
" Logistics Manager (07/18/18)"

Wincanton has appointed Martin Read as its new chairman. The former chief executive of IT group Logica will take over from interim chairman Stewart Oades on Aug. 1. Wincanton is facing pressure from shareholder Gatemore, which in April called on the company to split its business into two. Gatemore believes Wincanton's two divisions, Retail and Consumer and Industrial and Transport, are not a natural fit. Selling one of the two divisions could boost the value of Wincanton by 88% and enable the company to make substantial contributions to its poorly funded defined benefit pension plan, according to Gatemore. The investor also has taken aim at Wincanton's management remuneration strategy for playing toward the short term, rather than aligning with the long-term financial performance of the company. Last year, Gatemore successfully opposed a plan by the board of DX Group to merge the company with Menzies Distribution. Gatemore, led by Liad Meidar, is also the largest shareholder of DX Group.

Thyssenkrupp Investor Elliott Demands Appointment of New 'External' CEO
" Reuters (07/19/18) Taylor, Edward"

Elliott Associates has sent a letter to Thyssenkrupp's supervisory board urging it to replace its CEO with a new external candidate. Guido Kerkhoff was named acting CEO after Heinrich Hiesinger stepped down this month. Chairman Ulrich Lehner also resigned this week, removing a barrier to investor demands to restructure the industrial conglomerate. Kerkhoff should be seen only as an interim solution, said Elliott's letter. “Shareholders expect an unbiased search for a new external CEO, driven by what is best for the company and all of its stakeholders, including shareholders,” the investor said. Elliott said Kerkhoff's installation as interim CEO gives the company some stability. “However, this interim period must be kept short so that Thyssenkrupp may quickly be set on a path to prosperity and growth,” Elliott said. Thyssenkrupp should continue on a path of “structural evolution” Elliott added, noting that it had never demanded a wholesale dismantling of the conglomerate and that it was disappointed with the terms of a deal with Tata Steel. Elliott also urged Thyssenkrupp's management to distance itself from disparaging remarks made by Lehner, who recently accused activist investors of engaging in “psycho terror.” Elliott denied it had harassed families and neighbors of Thyssenkrupp executives, or spread lies, and that it had just acted as a concerned investor. Elliott owns a less than 3% stake in the German company.

Detour Battle With Paulson Intensifies Over Miner's Future
" Bloomberg (07/18/18) Bochove, Danielle; Deveau, Scott"

Paulson & Co. is accusing Detour Gold Corp. (DGC) of failing to share information about a potential buyer, while the gold miner claims the hedge fund is misinforming investors. “The company does not have a sale process in place nor has it received any offers to purchase its shares,” Detour said Wednesday, adding that Paulson has “misinformed the investment community.” The hedge fund had earlier issued a news release saying it had received information from Detour that a major gold miner was interested in possibly buying it. Detour had already filed a complaint with the Ontario Securities Commission (OSC) before Paulson issued the release, Detour said. The company described the hedge fund's actions as “self-serving,” “aggressive” and “bullying.” Paulson, meanwhile, requested that Detour's board immediately share the information with all stockholders and the public, and announce a formal process to evaluate strategic opportunities. Paulson also said it's proceeding with efforts to overhaul most of Detour's board with independent nominees. And in a subsequent press release, Paulson said it had been in touch with the OSC earlier on Wednesday and provided the regulator with the letters. The hedge fund, which owns a 5.4% stake in Detour, said it will support any investigation by the OSC.

Detour Gold Investor Joins Paulson to Push for Possible Sale
" Bloomberg (07/18/18) Deveau, Scott; Bochove, Danielle"

Another Detour Gold Corp. (DGC) shareholder has urged the Toronto-based gold miner to put itself up for sale, after Paulson & Co. said a major mining company was interested in potentially acquiring it. Coast Capital Management, the investment firm founded by James Rasteh, called for Detour’s board to immediately hire an independent financial adviser to explore a sale. He wrote that “there is no conceivable rationale for Detour to continue to operate as an independent entity,” and the “sole optimal outcome is indeed a sale of the company.” Rasteh also criticized what he called the board and management’s “track record of self-enrichment and value destruction.” “May we remind you that this company does not belong to you, but rather to us, the shareholders,” Rasteh said in his letter. “Your clear refusal to engage in a robust and unfettered sale process violates your most basic duty: to live up to your fiduciary responsibilities.” The letter was sent after Paulson & Co. said Wednesday that it planned to push ahead with an effort to shake up Detour's board. Paulson said it received notice that a major gold miner was interested in potentially acquiring the company.

Carige's Top Investor Threatens Legal Action Over Bank's Management
" Reuters (07/18/18) Flak, Agnieszka; Za, Valentina"

Banca Carige’s largest shareholder on Wednesday threatened to take legal action against management in an escalating boardroom battle that could put the Italian lender’s turnaround at risk. Vittorio Malacalza, a businessman who owns a 20.6% stake in the Genoa-based bank and is its deputy chairman, stepped down as director earlier this week due to disagreements with the board over the management of the bank and its governance. His resignation follows that of Chairman Giuseppe Tesauro and two other directors this month. Malacalza said Wednesday the same reasons that prompted his resignation led him to ask a lawyer to look into “documents, actions and moves taken by top executives in the course of the troubled management of Carige to assess whether there are any elements of a criminal nature ... reserving the right to take necessary steps to protect his interests.” Carige has long been dogged by governance issues and investment bankers say concerns about potential shareholder conflicts complicate its search for a merger partner. Malacalza has also criticized the handling of the recapitalisation under CEO Paolo Fiorentino. Fiorentino said Wednesday he was “not worried at all” about Malacalza's threat and urged lawyers to examine any documents they wanted. Meanwhile another shareholder with a nearly 10% stake, financier Raffaele Mincione, backs the CEO and is seeking backing for a slate of board nominees he plans to propose at a shareholder meeting this fall, a source said.

Premier Foods Chief Clings on Despite Mass Shareholder Revolt
" The Guardian (07/18/18) Butler, Sarah"

Despite facing a 41% protest vote against his re-election by shareholders, Premier Foods CEO Gavin Darby said he would stay on as head of the company. Oasis Management had called on Darby to step down regardless of the outcome of the vote. After the company's annual general meeting, Chairman Keith Hamill said the board backed Darby, and the decision had been accepted by nearly 60% of shareholders. "We intend to continue to listen and have discussions with shareholders, including those whose support we don't have," Hamill said. Oasis, which holds a 17.3% stake in Premier, has accused Darby of "persistent value destruction" during his five-year tenure and claims that the company is in a "zombie-like state" because of his failure to drive growth. However, other shareholders, including Paulson & Co. and Nissin Foods, which hold stakes of 6% and 20% respectively, backed Darby. About 25% of proxy votes opposed the re-election of nearly all Premier's directors and its remuneration report. Meanwhile, a spokesperson for Oasis noted, "A majority of Premier Foods' top independent public equity shareholders have voted against the re-election of Gavin Darby...The message from today's huge negative vote could not be clearer—Gavin Darby has no credibility and he should step down immediately. If he is unwilling to resign, we urge the other directors to discharge their duties and act in the best interests of the shareholders as a whole to remove him."

Anger Over Corporate Governance All Talk as TalkTalk Investors Back Management
" Financial Times (07/18/18) Fildes, Nic"

At TalkTalk's July 18 annual meeting, investors backed the broadband company's management despite recommendations by Glass Lewis, PIRC, and other shareholder advisory groups against management due to complaints about the board's independence and the company issuing in February shares equivalent to a fifth of its stock without giving existing shareholders the right of first refusal. Only 3% of shareholders voted against the re-election of Sir Charles Dunstone, TalkTalk's largest shareholder, as executive chairman. Votes against non-executive directors John Gildersleeve and Roger Taylor were slightly larger. Further, more than 14% of shareholders voted against a resolution regarding the company's right to allot shares.

Paulson Says Suitor Is Interested in Acquiring Detour Gold
" Bloomberg (07/18/18) Bochove, Danielle"

Paulson & Co., which is seeking to overhaul the board of Detour Gold Corp. (DGC), said it has received information from the company that a major gold miner may be interested in acquiring it. Detour's shares rose as much as 13% after the news. Paulson says it asked that Detour's board immediately share the information with all shareholders and the public, and initiate a formal process to examine strategic opportunities. "To date, the Detour Gold board has failed to do so, therefore Paulson is issuing this press release so that all company shareholders and the wider public have the same information as Paulson," the hedge fund said Wednesday. As a result of the "unsolicited" communication from Detour interim CEO Michael Kenyon, Paulson is proceeding with efforts to replace most of Detour's board with independent nominees "committed to exploring all strategic alternatives including a potential sale of the company." According to Paulson, Detour said it would only sign a confidentiality agreement with the miner interested in potentially buying it, if both the party and Paulson agreed to a stand-still agreement. Paulson said it has no affiliation with the major mining company. Last month, the fund—which owns a 5.4% stake in Detour—sent a letter to the Toronto-based company requesting it put itself up for sale, citing stock losses and poor management. Paulson is also looking to put together a coalition of investors to address some of its biggest grievances with the gold sector.

Commvault Simplifies Product Count, Condenses 20 Into 4
" The Register (UK) (07/17/18) Mellor, Chris"

Commvault (CVLT) is now offering a simplified and repackaged product set that should enable the company and its partners to compete more effectively with fast-growing rivals. The move comes just three months after Elliott Management got involved with Commvault's board-level considerations. CEO Bob Hammer appears to have turned the involvement into a positive force for change. Still, the company is searching for a replacement for Hammer. The enterprise backup, recovery, and data management company is consolidating 20 individual offerings into four products with extended payment options. Commvault Complete Backup & Recovery is a complete backup and recovery solution, HyperScale Technology is add-on technology, Orchestrate is automated service delivery technology, and Activate facilitates response to data risk to help users comply with privacy regulations. Commvault is also improving its channel program. Customers and channel partners will be able to select Commvault products that match their needs and receive a price quote much faster than before.

Aim-Listed Companies Need to Boost Corporate Governance
" IR Magazine (07/18/18) Holt, Andrew"

Companies listed on London's Alternative Investment Market (Aim) have until Sept. 28 to post on the Rule 26 section of their website details of which corporate governance code they follow and a narrative description of how they apply the principles of that code. This information must be updated annually. This means that prior to the deadline, these companies must review their corporate governance arrangements and identify and address any areas of non-compliance. According to Alasdair Steele, a partner at law firm CMS in London, "The biggest change for Aim-listed companies is the requirement to comment specifically on areas where they diverge from their chosen governance code. For many, this is a greater level of disclosure than they have had to make historically and means many will need to carry out detailed governance code compliance checks between now and Sept. 28 so they can make the necessary disclosures. I would also expect to see this greater level of disclosure flow through to fuller disclosure in Aim-listed companies' annual reports."

Elliott Management Takes 5% Stake in Alpine
" Nikkei Asian Review (07/18/18) Hama, Takehiko; Kikuchi, Takayuki"

Elliott Management disclosed a 5.12% stake in Alpine Electronics and indicated it may make a major proposal at the Japanese company, according to a filing Friday. The move raises the possibility of new opposition to a takeover bid from fellow Japanese manufacturer Alps Electric. Elliott's position on Alps' offer is unclear, but it may back Hong Kong fund Oasis Management, which opposes the proposal. Together, the two investors reportedly own roughly 15% of Alpine, with a two-thirds majority required to approve the buyout. Alpine plans to present Alps' takeover proposal to shareholders at an extraordinary meeting in December. "At this point, no specific demands have come from Elliott," said an Alpine representative, adding that plans for the meeting remain unchanged. Alps, which owns 40% of Alpine, wants to boost its own presence in car devices through a combination. But Oasis has criticized the proposal, arguing that the swap ratio of 0.68 Alps shares for each Alpine share is unfair to investors. During Alpine's annual shareholders meeting last month, Oasis submitted proposals seeking a big dividend hike and the appointment of outside directors. Those motions were defeated, but they secured approval in the upper-20% range.

Premier Foods May Sell Brands to Calm Shareholders
" The Guardian (07/18/18) Butler, Sarah"

Premier Foods acknowledged that it must accelerate its turnaround plans, a day ahead of a showdown with Oasis Management, which is seeking to remove CEO Gavin Darby at the annual general meeting Wednesday. Darby said "nothing is off the table," including a sale of parts of the business. He also said the battle might help Premier find potential buyers for some brands. "The benefit of this process is there can't be a single investment banker or food company that is not aware that if the price is right the board would look at an asset sale," Darby said. Oasis, which last week doubled its stake in the company to 17.3%, accuses Darby of "persistent value destruction" during his five-year tenure and failure to drive growth. Paulson & Co., which owns a 6% stake in Premier, has backed Oasis, but No. 1 shareholder Nissin Foods with a 20% stake is behind Darby. Oasis wants Premier to sell Batchelors, the Cup a Soup, noodles and pasta sauces brand, which it says could raise £200 million to pay down the group's heavy debts. Premier Chairman Keith Hamill said the company had unsuccessfully discussed a sale of Batchelors early this year with Nissin Foods, but that it would only sell assets at an "exceptional price" that let the firm pay off debts and invest for the future. However, he said: "I don't think anything is off the table."

Premier Foods CEO Darby Set to Survive Vote to Replace Him by Narrow Margin
" Reuters (07/18/18)"

Premier Foods CEO Gavin Darby has secured the support of nearly 59% of proxy votes counted ahead of Wednesday's annual general meeting, with about 41% of shareholders opposing his re-election. The final result will be announced later Wednesday.

Owens Realty Mortgage Stacks the Board and Deprives Shareholders of Their Vote, According to Hovde Capital
" Business Wire (07/17/18)"

Hovde Capital Advisors has issued a statement saying that at Owens Realty Mortgage Inc.'s (ORM) annual meeting of shareholders on July 16, the company announced two unnamed directors would be appointed to the board, bypassing shareholders' basic right of having the ability to elect their directors. ORM's board has now added three new directors in the midst of a proxy contest, which is an unheard-of practice. Further, at the annual meeting, ORM Chairman Schmal admitted that the company had only entered into discussions during the last week with these two newly proposed directors and did not know their backgrounds well. "This is clearly a desperate attempt to stack the board in order to protect their own self-interest," Hovde Capital's statement says. "ORM is furthering its abuse of shareholders by depriving them of their most basic right of being able to elect their directors. Instead of taking votes on the existing slate of directors, Chairman Schmal proclaimed that the annual meeting would be adjourned and postponed three days and voting would remain open until Thursday July 19, 2018, with no reason provided."

Ericsson Gains as CEO's Cost-Cutting Turnaround Takes Hold
" Bloomberg (07/18/18) Rolander, Niclas"

CEO Borje Ekholm's turnaround of Ericsson (ERIC) appears to be taking hold, sending shares of the Swedish wireless network maker rising. Profitability improved faster than analysts had expected for the second straight quarter, on the back of cost cuts that boosted earnings, the shedding of unprofitable contracts, and stronger sales of new, more lucrative products. After years of declining sales, the company's networks unit saw a hike in revenue, driven by North America, where all major carriers are preparing for fifth-generation networks. In his 18 months at the helm, Ekholm has slashed 20,500 jobs since early 2017 as part of a savings plan that has eliminated more than 10 billion kronor ($1.1 billion) of costs. The company's closely-watched gross margin rose to 36.7% in the second quarter on an adjusted basis, from 30.9% a year ago, beating analysts' expectations. After a second quarter that reflected continued improvement, "we expect Ericsson to report further sales and earnings strength" in the second half of this year, said Liberum analyst Janardan Menon. "The company seems on course to achieve or exceed its 10% operating margin target for 2020." The turnaround has not been quick enough for investor Christer Gardell's Cevian Capital AB, however, which demanded deeper cost cuts more rapidly.

Thyssenkrupp's Foundation to Steer Conglomerate in Leadership Crisis
" Reuters (07/17/18) Kaeckenhoff, Tom; Schuetze, Arno; Taylor, Edward"

Thyssenkrupp's foundation and biggest shareholder, with a 21% stake in the German conglomerate, has pledged to work with unions and management to appoint a successor to Chairman Ulrich Lehner. This comes as shareholders are pushing for the company to consider selling its elevators business and materials and services division—moves that have been opposed by Thyssenkrupp's workers and management. In addition to the foundation, Cevian and Elliott are shareholders that could influence the company's future, holding stakes of 18% and less than 3%, respectively. Other influential parties in the debate include workers, with unions holding half the seats on the company's supervisory board. "All great and enduring companies renew themselves, taking advantage of their strengths while adapting to new challenges and opportunities," says Lars Foerberg, founding partner of Cevian Capital. "As a large and long-term owner of Thyssenkrupp, Cevian Capital looks forward to supporting the company in achieving these objectives for the benefit of all Thyssenkrupp stakeholders."

UPL Seeks $3 Billion Loan to Buy Ackman-Backed Arysta
" Bloomberg (07/17/18) Alexander, George Smith; Joshi, Anurag"

Mitsubishi UFJ Financial Group and Cooperatieve Rabobank UA are holding talks with UPL on financing the Indian chemical producer's bid for the agricultural pesticides unit of Platform Specialty Products (PAH). Platform's biggest shareholder is Bill Ackman's Pershing Square Capital Management. Last year, Platform said it would spin off Arysta LifeScience into a separate company, but entered into exclusive negotiations on a potential sale of the business in June. UPL is seeking a loan of about $3 billion. The company is part of a consortium that is negotiating with Platform, which includes the Abu Dhabi Investment Authority. The Abu Dhabi sovereign fund plans to contribute up to $1.3 billion of equity toward the bid for Arysta. A final acquisition agreement has not been reached, and details of the funding could change, according to people with knowledge of the discussions. Platform plans to update investors on a deal by the time of its second-quarter results, which are likely to be announced in early August.

Thyssenkrupp Investor, Labor Union Call for Peace Talks
" Bloomberg (07/17/18) Wilkes, William; Henning, Eyk"

Thyssenkrupp AG's labor unions and second-largest shareholder Cevian Capital want to meet to discuss plans for the company's future after the resignation of Chairman Ulrich Lehner. The discussions may bridge a contentious divide between investors, who say Thyssenkrupp needs to streamline its businesses, and unions that want to protect jobs. The German company is facing a leadership vacuum after its chief executive officer and chairman resigned in July under shareholder influence. "We won't agree to a fast carve-up of assets, but are instead interested in developing Thyssenkrupp further," said Markus Grolms, the deputy chairman of one of the labor unions. Cevian supports Grolms' suggestion for discussions. Cevian also reiterated its goal for simplifying Thyssenkrupp, saying it must be "nimble" and "free from excessive costs and bureaucracy" to succeed. Thyssenkrupp shares rose 9.1% on July 17 on speculation that the company may be broken apart.

U.S. House Approves Financial Services Legislation Supported by Nasdaq's Revitalize Initiative
" NASDAQ (07/16/18)"

The U.S. House recently passed several financial services measures in an attempt to revitalize the capital markets and improve the public company experience. The "Modernizing Disclosures for Investors Act" directs the Securities and Exchange Commission (SEC) to conduct a study aimed at simplifying corporate disclosure by looking at the possibility of making the Form 10-Q optional while retaining key investor disclosures in, for instance, the earnings release. The "Improving Investment Research for Small and Emerging Issuers Act" directs the SEC to conduct a study on issues affecting the provision of and reliance upon investment research into small issuers. Meanwhile, the "Main Street Growth Act" would allow venture exchanges to trade smaller, less liquid securities in an environment better designed for their trading characteristics. Also, in late June, the SEC said it will adopt amendments to the smaller reporting company definition in an effort to expand the number of smaller public companies that qualify for scaled disclosures. And on June 28, the Senate Banking Committee held a hearing on the "Corporate Governance Reform and Transparency Act." The bill seeks to regulate proxy advisors and eliminate conflict of interests.

Thyssenkrupp Inches Toward Breakup as Top Leadership Departs
" Bloomberg (07/17/18) Wilkes, William"

Following the resignations of Thyssenkrupp AG's chief executive and chairman this month, the company could be more likely headed for a breakup, analysts say. Both Chairman Ulrich Lehner and CEO Heinrich Hiesinger were opponents of splitting up the sprawling German conglomerate. Meanwhile, analysts and investors including Cevian Capital have pressured management to streamline the company, suggesting it sell off its material-trading unit or spin off its profitable elevator division. JPMorgan Chase & Co. said the executives' departures will fuel hopes that a restructuring can progress faster. "Lehner had been one of the most vocal naysayers around a potential breakup, thus, if anything, this is likely to reinvigorate, rather than dampen, hopes that this will now be the course for Thyssenkrupp," wrote Bruna Haq, an analyst at JPMorgan. The appointment of the next CEO or chairman could signal which direction the company is headed. Thyssenkrupp's powerful labor unions, which control half the seats on the supervisory board, and its top shareholder, the Alfried Krupp von Bohlen and Halback Foundation, have continued to argue for keeping the company together. One analyst noted that it was too early to tell what the impact of Lehner's resignation would be, but the key was in the hands of the foundation. Other analysts said the leadership turmoil increases the odds of a massive shakeup.

Investor Proposals Get Sharper, Garner More Support
" Wall Street Journal (07/17/18) Shumsky, Tatyana"

A new report by the law firm Gibson, Dunn & Crutcher LLP reveals that investors submitted 788 proposals to companies during this year's proxy season, down 5% from last year and marking the third straight year of declines. The most frequently submitted proposals were on social and environmental topics at 43%, followed by governance proposals at 36%. Further, the average support for proposals that came to a vote climbed to 32.7% this year from 28.7% in 2017. "We have seen a number of large institutional investors announcing voting policy changes indicating that they're more likely to support these proposals," said Elizabeth Ising, a partner at Gibson Dunn and co-chair of the firm's securities regulation and corporate governance practice. Meanwhile, companies submitted 256 "no-action" requests this year to the Securities and Exchange Commission (SEC), and staff granted 64% of these requests for exclusion. Last year, the SEC approved 78% of the 288 requests it received from companies. The decline is due in part to a drop in proxy access proposals to 48 this year from 112 last year. In addition, this was the first year that some companies followed SEC staff's new guidance on providing board analysis to show why a shareholder proposal was not significant to the business and should be excluded.

Owens Realty Plans to Add Two Directors Put Forth by Largest Stockholder
" Seeking Alpha (07/16/18) Kiesche, Liz"

Owens Realty Mortgage (ORM) announced it will appoint two new independent directors nominated by Hovde Group, its top shareholder, to its board. Hovde Group has waged a proxy battle against ORM, proposing two director nominees and winning the backing of proxy advisory firm Institutional Shareholder Services for one of them. "The board has interviewed these highly qualified and independent individuals and, subject to customary diligence, will expand by two seats so they can be appointed as directors," the company said. ORM did not specify who the two new directors will be.

Britain's FirstGroup Considering All Options to Boost Value
" Reuters (07/17/18) Varghese, Justin George"

FirstGroup announced Tuesday it is weighing all options to maximize its value, after rebuffing two approaches from private equity firms. The rail and bus operator, which is under pressure from West Face Capital, said overall trading performance in the recent quarter was in line with the plans it presented in May. FirstGroup replaced its CEO this spring after profit declined 5% last year and it was forced to slash its outlook for the year to the end of March 2019. "The board is examining all appropriate means to mobilize the considerable value inherent in the group, and to deliver shareholder value," Executive Chairman Wolfhart Hause said ahead of its annual general meeting on Tuesday. The company said in May it could sell its Greyhound bus division after the business suffered from poor performance in the United States. Hauser said the company initiated the process of withdrawing from most of Greyhound Canada's operations in the west of the country, adding that this would "address some of the long-standing issues" there. Shareholders have experienced five years of disappointments since the company got rid of its dividend in 2013 and raised 615 million pounds ($820 million) in a rights issue.

BW LPG to Nominate Three Independent Director Candidates to Stand for Election at Dorian's 2018 Annual Meeting
" Associated Press (07/16/18)"

BW LPG Limited (BWLPG) announced Monday it plans to nominate three independent, highly qualified individuals to stand for election to Dorian LPG's (LPG) board of directors at the 2018 annual shareholder meeting. On May 29, BW LPG proposed to merge with Dorian in an all-stock transaction, under which Dorian shareholders would have received 2.05 BW LPG shares for each Dorian share. On July 9, it sweetened its offer to 2.12 BW LPG shares for each Dorian share. BW LPG says its proposal values each Dorian share at USD $8.88 per share, representing a 28% premium to the company's unaffected share price of USD $6.96 as of May 25, and a premium of 19% to the long-term historical exchange ratio of Dorian and BW LPG since Dorian's IPO. "We are nominating three independent, highly qualified directors who each have a proven track record and have expressed their commitment to act in the best interest of all Dorian shareholders," said BW LPG CEO Martin Ackermann said. "Since announcing our proposal to combine with Dorian, the feedback we have received from a significant percentage of Dorian's shareholders has been overwhelmingly positive, including a recent public letter of support from SEACOR Holdings, one of Dorian's largest shareholders ... Due to Dorian's continued refusal to engage meaningfully with us on a proposed combination, we have decided to go directly to shareholders with our director nominees. We urge all Dorian shareholders to make their voices heard by voting to elect directors who are open to exploring opportunities to maximize value.”

Australia CEO Pay Hits a Record as Workers' Wages Stagnate
" Financial Times (07/16/18) Smyth, Jamie"

A report by the Australian Council of Superannuation Investors found the pay of chief executives in Australia hit a record last year as workers' wages flatlined. According to the pensions group report, median realized pay for ASX 100 chief executives rose 12.4% to AU$4.36 million (US$3.24 million) in 2017, with bonus payments increasing 18%. All but six of the 80 chief executives eligible for a bonus received one. In Australia, wage growth is stuck near record-low levels and household debt is among the highest in the world. The pensions group warned that boards' sanctioning of big bonus payments without sufficient scrutiny is destroying trust in business.

Thyssenkrupp Chairman Lehner Quits, Following CEO
" Reuters (07/16/18) Busvine, Douglas"

Thyssenkrupp Chairman Ulrich Lehner informed the executive board on July 16 that he would resign, effective July 31, and withdraw from the supervisory board. The announcement follows the resignation of the German industrial group's CEO under shareholder pressure. A statement from Thyssenkrupp read, "The supervisory board will decide on the succession...shortly."

Premier Foods Vote Looms Amid Shareholder Split on Future of Top Boss
" City A.M. (07/15/18) McCarthy, Sebastian"

Premier Foods shareholders will decide the fate of CEO Gavin Darby this week. Nissin, the British food manufacturer's largest shareholder with a 20% stake in the company, is believed to be a supporter of Darby. However, hedge funds Oasis Management and Paulson & Co., Premier's second and third largest shareholders, respectively, have called on Darby to step down. Hong Kong-based Oasis has accused Darby of leading Premier into a "zombie-like state" and "persistent shareholder value destruction." Darby has overseen a 1 billion pounds refinancing of Premier, but shareholders became disappointed with his leadership when he rejected takeover offers from U.S. spice maker McCormick (MKC). Darby defended his decision by saying he could create better value. The re-election vote will take place Wednesday during the company's annual general meeting. Darby said in a recent media report that Oasis' plan to replace him with the company's finance director and sell its Batchelors brand was "flawed."

Delaware's Voluntary Sustainability Certification Law
" Harvard Law School Forum on Corporate Governance and Financial Regulation (07/15/18) Zeberkiewicz, John"

Delaware Gov. John Carney recently signed into law the Delaware Certification of Adoption of Transparency and Sustainability Standards Act, effective Oct. 1. The first-of-its-kind law will provide Delaware-governed entities with a platform for demonstrating their commitment to corporate and social responsibility and sustainability. The act, which is voluntary, applies only to entities seeking to become certified as reporting entities. The act stresses that sustainability practices should be addressed at the highest levels of the organization. To be certified as a "reporting entity," the "governing body," or board of directors, must adopt resolutions creating "standards" to assess and report the impact of its activities on society and the environment and "assessment measures" by which it gauges its performance in meeting its standards. Entities can select their own standards and tailor them to the specific needs of their industry or businesses. While the act is principally a disclosure regime requiring entities to provide reports with respect to their standards and metrics, entities are not required to include any privileged information, trade secrets, or competitively sensitive information in their reports.

Barclays Mulls U.S. Push as Investor Looms
" Wall Street Journal (07/16/18) Colchester, Max"

Barclays (DTYS) CEO Jes Staley reportedly is debating whether to scale up the company’s online U.S. retail bank amid pressure from shareholder Sherborne Investors. The British bank—which is seeking to boost its stagnant share price—could also consider rolling out its dominant U.K. payments platform stateside, and is putting more capital behind its U.S. credit card operations, according to a source. The lucrative U.S. market has long attracted European banks looking to expand out of saturated home economies, but some of the top lenders nearly collapsed from exposure to the U.S. housing market. The banks that stuck it out are trying to expand again to take advantage of robust U.S. growth and stay relevant on a global scale. Barclays executives are now debating whether more exposure to the U.S. retail market could both generate revenues and fund its U.S. operations more efficiently. Meanwhile, Sherborne—which owns a 5% stake in Barclays—wants to see capital moved away from its investment bank trading operations. Sherborne has not yet publicized its plan to shake up the bank. Barclays's management says it will generate returns equal to its cost of equity by 2020. The bank said it would undertake share buybacks at an unspecified time, so capital for any planned expansion is tight.

Premier and Oasis Line Up for a Food Fight
" Financial Times (07/15/18) Daneshkhu, Scheherazade; Weinland, Don"

At Premier Foods' annual meeting on Wednesday, CEO Gavin Darby faces a rebellion from two of the company’s largest shareholders, which plan to use their combined 23% stake to vote against his re-appointment.  The revolt is led by Hong Kong-based hedge fund Oasis Management and backed by U.S. hedge fund Paulson & Co.  Oasis, which upped its stake last week to 17.3%, accuses Darby of “persistent value destruction” during his five-year tenure.  The company is in a “zombie-like state” because he has failed to drive growth, it claims.  Paulson joined in last week, saying directors were enjoying “comfortable” positions at the expense of shareholders, and calling for new management.  Oasis founder Seth Fischer likens the situation at the U.K. company to its experience in Japan, where more than half of the hedge fund’s investments are focused.  “You have a shareholder base that has not been part of the conversation at Premier Foods,” he said.  “We have seen a lot of situations like this in Japan.”  Shareholders including Standard Life and Paulson have been upset with the board since it let a deal with U.S. spice maker McCormick (MKC) fall through in 2016.  The shares have been stuck around 40p ever since the approach, well below McCormick’s 60p bid.

Thyssen and Kone Owners Held Merger Talks on Elevator Ops: Paper
" Reuters (07/15/18)"

Top investors in Thyssenkrupp and Kone reportedly have held discussions about a possible combination of the companies' elevator units. German daily Handelsblatt reported on Sunday that the Alfried Krupp foundation, which owns 21% of Thyssen, and Kone's largest shareholder Antti Herlin have engaged in deal talks. The first conversations occurred as early as 2016, but the proposal was spurned by Thyssen's then-CEO Heinrich Hiesinger, the paper said. The foundation said it had informed Kone that questions regarding the elevator unit should be referred to Thyssenkrupp, and notified Thyssen's executive board about the talks, saying it was up to the company to make decisions or respond to queries. Earlier this month, the Alfried Krupp foundation, which has two seats on Thyssen's supervisory board, said that a break-up of the industrial conglomerate would not happen, echoing the company's chairman. Chairman Ulrich Lehner had said that there were no plans to divest the group's elevator unit, its prized possession, which some observers have said would rid Thyssenkrupp's share price of a large conglomerate discount. Meanwhile, Cevian—Thyssen's second-largest shareholder with a 18% stake—has been demanding a strategic review of all of Thyssenkrupp's business areas, saying each might perform better in a different set-up.

Britain Announces 'Short and Sharper' Code for Companies
" Reuters (07/16/18) Jones, Huw"

Britain has a new corporate code directing U.K. companies to rein in excessive executive pay, pay more attention to staff, and make boards more diverse. The Financial Reporting Council (FRC) updated its non-binding 26-year old code of corporate standards for publicly listed companies, which must comply with it or explain in annual reports to shareholders if they do not. “These changes will drive improvements in how boardrooms engage with employees, customers and suppliers as well as shareholders, delivering better business performance and public confidence in the way businesses are run,” said Greg Clark, Britain's business minister. Royal London Asset Management added that, “Ultimately though, tangible results will come from institutional investors who have the potential to drive change through their power as the ultimate owners of companies.” There is a new provision for greater board engagement with the workforce to understand their views, but stops short of calling for worker representation on boards. This, along with a requirement to have “whistleblowing” mechanisms that allow directors and staff to raise concerns for effective investigation, mark the biggest broadening of corporate standards in many years, the FRC said. The code also emphasizes the need for boards to refresh themselves, become diverse, and plan for replacing top executives. Furthermore, it introduces a requirement for companies to explain publicly if a board chair has remain unchanged for more than nine years. Company remuneration committees should also take into account workforce pay when setting director pay, and consider reputational and other risks from excessive awards.

Arjuna Capital: Facebook Is 10th Of 10 Tech Companies Urged by Shareholder Campaign To Disclose Gender Pay Gap
" PR Newswire (07/13/18)"

On July 12, Facebook (FB) became the 10th company to bow to pressure from Arjuna Capital to disclose its publish its annual diversity report, claiming full gender pay equity since 2014. The investor applauded the disclosure, and called for on-going engagement with the social media giant that will continue to seek greater transparency. Arjuna Capital's Natasha Lamb launched a successful shareholder campaign three years ago pressuring nine tech companies—Adobe (ADBE), Amazon (AMZN), Apple (AAPL), eBay (EBAY), Expedia (EXPE), Google (GOOGL), Intel (INTC), Microsoft (MSFT) and Texas Instruments (TXN)—to disclose wage data and close their gender pay gaps. Texas Instruments was added to the campaign in 2018, and on March 15, 2018 disclosed wage data and its intent to close its pay gap. "After 3 years of engagement with Arjuna Capital, Facebook has finally published quantitative data as it relates to gender pay equity," Lamb said. "We applaud the company, as it moves beyond lip service to a transparent accounting of how women are paid on an equal pay for equal work basis. There is still work to be done and the next step is for Facebook to publish the company's median gender pay and racial pay gaps. We look forward to a continued and more productive engagement going forward."

Xerox Explores Sale of Leasing Finance Unit: Sources
" Reuters (07/13/18) Roumeliotis, Greg; Baker, Liana B."

Xerox Corp. (XRX) reportedly is weighing the sale of a leasing unit that lends cash to customers to rent printers and equipment, in order to make itself more appealing to possible buyers following the cancellation of its $6.1 billion sale to Fujifilm Holdings Corp. Divesting the leasing unit would relieve Xerox of about $3.6 billion in debt, according to a source. Carl Icahn and Darwin Deason, who took control of Xerox earlier this year, are preparing to launch an auction for the company, which has a market capitalization of $6.4 billion and total debt as of the end of March of $5.5 billion. Xerox has not made a decision on selling the leasing finance unit, sources said this week. This May, Apollo Global Management reportedly approached the company to express its acquisition interest. Reducing Xerox's liabilities through the sale of the leasing finance unit would enable private equity firms to place more debt on the company to juice returns. Xerox has said it is exploring its strategic options after it ended its deal with Fujifilm, following pressure from Icahn and Deason, who together own 15% of Xerox.

Elliott Seeks $770 Million From South Korea in Samsung Fight
" Bloomberg (07/13/18) Deveau, Scott"

Elliott Management Corp. is seeking compensation for at least $770 million in damages from South Korea over how its former administration intervened in the merger of Samsung C&T Corp. and Cheil Industries Inc. in 2015. The hedge fund said Friday it had submitted the dispute for arbitration and urged the government to pay the damages in order to preserve its reputation with international investors. Elliott said the parties have so far been unable to resolve the matter on their own. “Like all prominent economies, Korea obviously has no interest in being viewed as hostile to foreign investors, particularly when other economies in the Asia-Pacific region are fast becoming potentially attractive alternatives," Elliott said. The hedge fund lost a proxy fight to oppose the combination of the Samsung units, solidifying the founding family's grip over the group. Elliott claims the government unfairly meddled in the deal—which led to a massive corruption scandal in the country—and says it caused the hedge fund significant damages. Elliott encouraged the South Korean government Friday to uphold its obligations toward foreign investors, including paying the damages, working to prevent future breaches, and taking steps to no longer protect the ruling families at the expense of shareholders. "Maintaining credibility internationally among investors is critical to attracting foreign investment and propelling Korea to even greater prosperity," Elliott said.

Thyssenkrupp Names Finance Chief Kerkhoff as Interim CEO
" Reuters (07/13/18)"

Thyssenkrupp CFO Guido Kerkhoff was named interim CEO on Friday and won the support of the German industrial group’s top shareholder. Former CEO Heinrich Hiesinger resigned last week after failing to win unanimous shareholder backing for a deal to create a steel venture with India's Tata Steel. Kerkhoff will oversee the company until the process of finding a Hiesinger's replacement is completed. Cevian Capital, which owns an 18% stake in Thyssenkrupp, and Elliott have requested a sweeping strategy review at the industrial conglomerate. They are at odds with the Alfried Krupp von Bohlen und Halbach Foundation, which owns a 21% stake and represent the legacy of the company's late owner, who desired that Thyssenkrupp remain whole. The Krupp foundation's board met on Friday following criticism from labor leaders that it had failed Hiesinger by not backing him in the disagreements over strategy that preceded his resignation. The task now ahead is to implement the steel venture with Tata and develop other areas of the business. The prime minister of North Rhine-Westphalia—the German state where Thyssenkrupp is based—and foundation board member Armin Laschet on Thursday backed Thyssenkrupp chairman Ulrich Lehner's calls for the company to stay whole.

Edgewell (EPC) Said to Face Shareholder Pressure to Oust CEO
" StreetInsider.com (07/12/18)"

Legion Partners is calling for Edgewell Personal Care Company (EPC) to remove its CEO David Hatfield and to undergo an extensive portfolio review, according to Bloomberg, citing a report from DealReporter. If the review discovers that selling non-core assets would make it more of a takeover target, that may be the best option, it states.

Canadian Utility Hydro One's Board, CEO Leave Under Agreement With Province of Ontario
" Wall Street Journal (07/11/18) Armental, Maria"

On July 11, Hydro One Ltd. CEO Mayo Schmidt retired and the company's directors agreed to resign under a deal with its biggest shareholder, the Province of Ontario. CFO Paul Dobson will serve as interim CEO. Under the Canadian utility's agreement with Ontario, the province will nominate four directors, and six others will come from a committee formed by representatives of Hydro One's other biggest shareholders. The new board should be in place by Aug. 15, and it will be tasked with appointing the new CEO, who will become the 11th member of the board. Hydro One also will consult with the province—which holds a 47% stake in the company—on executive compensation.

U.K.'s Mears Shoots Down Investor Call to Name Hogarth Chairman
" Reuters (07/12/18)"

Mears Group has spurned a request to put a shareholder's proposed candidate for chairman to a vote at its general meeting. A fund advised by Shareholder Value Management (SVM) had sought a non-binding vote to elect Andy Hogarth, the former CEO of Staffline Group, as head of the board. Mears said last week that Chairman Bob Holt would not stand for re-election at the company's 2019 annual general meeting after SVM demanded his exit, citing underperformance by the company. "The company has now refused to give the markets a voice showing, once again, a strong disregard for its shareholders," said Gianluca Ferrari, director at SVM. "The board is hiding behind procedural formalities to escape an uncomfortable truth, which is that change needs to happen." Frankfurt-based SVM is the company's fourth biggest shareholder with an 8.9% stake, according to Thomson Reuters data.

Comcast Raises Sky Offer After Fox Sweetened Its Bid
" Wall Street Journal (07/12/18) Hagey, Keach; Dummett, Ben"

Comcast Corp. (CMCSA) late on Wednesday upped its bid for European pay-TV giant Sky, shortly after 21st Century Fox (FOX) sweetened its own offer. Comcast increased its offer for Sky to £14.75 per share, valuing the company at $34 billion. That is a 5% premium to an offer Fox announced earlier Wednesday and 18% above Comcast's earlier bid. Comcast said its latest offer was recommended by Sky's independent directors. Fox already owns 39% of Sky and wants to consolidate ownership. The fight for Sky could affect the broader spat between Comcast and Walt Disney Co. (DIS) to acquire most of Fox’s entertainment assets. Depending on how the auction for Sky plays out, Comcast could choose to focus its efforts on the European operator and abandon its pursuit of Fox's assets, a source said. Meanwhile, the U.K. government announced Thursday it would not block Fox's pursuit of Sky, ending an extended regulatory review of the proposed deal. Although approval was expected, the review had remained as a potential barrier for Fox closing Sky. A number of hedge funds including Elliott Management Corp. have invested in Sky, and would likely oppose any bid they felt undervalued it.

Nestle Sells Small New Zealand Candy Brands in Latest Divestment
" Reuters (07/12/18)"

Nestle announced Thursday it is selling some small New Zealand candy brands to Australia's Quadrant Private Equity, the latest sign of the world's largest food company reorganizing its portfolio as Third Point pressures it for a faster overhaul aimed at boosting sales and profits. Nestle said it had reached a conditional agreement to sell brands including Mackintosh's toffees, Heards, and Black Knight licorice to the Australian group for an undisclosed price. The Swiss company, which is facing dwindling demand for packaged food, said up to 55 of more than 270 jobs would be lost at its Wiri factory that will reduce output to focus on culinary products. Nestle agreed to sell its U.S. confectionery business to Italy's Ferrero for $2.8 billion early this year, and is under shareholder pressure to divest more.

Elliott Plans to Hold Onto AC Milan, Plot Turnaround
" Bloomberg (07/11/18) Deveau, Scott; Lepido, Daniele"

Elliott Management Corp. announced Tuesday it had taken control of AC Milan after the club's Chinese owner defaulted on its debt obligations. The hedge fund plans to hold onto the Italian football club and run it alone, according to sources, at least until it is back on solid footing. Elliott said its goal was to "achieve long-term success for AC Milan by focusing on the fundamentals and ensuring the club is well-capitalized." The hedge fund will not consider selling the club or bringing in a partner in the near future while it works on stabilizing AC Milan's finances, the sources said. Elliott has said it plans to inject 50 million euros ($58.4 million) in equity to stabilize the club and will add further capital over time to fund the transformation.

Cars.com Officially Goes on the Sales Block
" New York Post (07/11/18) Kosman, Josh"

Cars.com (CARS) reportedly has initiated a sales process, several months after the company added two of Starboard Value's nominees to its board. The moves confirm an earlier report that Cars.com had tapped JPMorgan to explore strategic options that could include a potential sale. Cars.com CEO Alex Vetter has been looking for more time to improve the company's financials, but that time has now passed, a source said. Hearst Corp. reportedly is considering a bid, as are several private equity firms. Cars.com, which has a $2.13 billion market cap, says that it attracts 19.4 million unique visitors per month.

Murdoch's Fox Ups Sky Bid to $32.5 Billion, All Eyes on Comcast
" Reuters (07/11/18) Sandle, Paul; Holton, Kate; Martin, Ben"

21st Century Fox (FOXA) has increased its offer for Britain's Sky to $32.5 billion, with all eyes now turning to Comcast (CMCSA) to return with a higher offer. In February, Comcast gatecrashed Rupert Murdoch's attempt to acquire the 61% of Sky that Fox did not already own. Fox's new bid of 14 pounds per share is a 12% premium to Comcast's offer but below the 15.05 pounds per share at which Sky was trading on July 11. Meanwhile, Comcast and Walt Disney (DIS) are in a separate $70 billion-plus battle to acquire most of Fox's assets, which would include Sky, with Disney securing conditional U.S. approval last month. Elliott is among the hedge funds that have acquired stakes in Sky in recent months, and shareholders like Crispin Odey, a former son-in-law of Murdoch, have called on Sky's independent directors to secure a better deal. Meanwhile, Hargreaves Landsown equity analyst George Salmon says, "Fox coming back in for Sky isn't a surprise in itself, but the fact the offer is slightly behind what some had anticipated brings another twist."

BT Faces Shareholder Revolt Over Executive Pay
" Financial Times (07/11/18) Fildes, Nic"

One-third of BT (BT) shareholders opposed the company's executive pay plan at its annual meeting, ahead of which Institutional Shareholder Services recommended rejecting the remuneration report due to concerns about outgoing CEO Gavin Patterson's bonus. Patterson was given a 2.5% pay raise this year, pushing his basic salary above £1 million, and his bonus could amount to 130% of his basic salary. The increase in his salary was announced just weeks after the company announced a plan to cut 13,000 jobs. BT Chairman Jan du Plessis said the company was "naturally disappointed" by dissent at the vote. Meanwhile, just 3.4% of board members opposed the re-election of board members Patterson; Nick Rose, senior independent director; and Tom Hoettges, CEO of Deutsche Telekom.

Thyssenkrupp Chairman Rules Out Breakup in Blow to Investors
" Reuters (07/11/18) Steitz, Christoph"

Thyssenkrupp’s supervisory board chairman has blasted two of the company's largest shareholders and said in an interview that a breakup of the conglomerate was out of the question.  He added that there were no plans to divest the group's elevator unit, its most profitable business, following the resignation of CEO Heinrich Hiesinger last week. “Crown jewels ... are only sold in times of need. There is no need (at Thyssenkrupp).”  His comments are aimed at Cevian and Elliott, which have criticized the company's performance under Hiesinger.  The CEO's resignation, which came just days after he reached a steel joint venture deal with Tata Steel, followed months of growing shareholder pressure over the company's strategy.  “Much has been done in the public sphere to destabilize the company and him as a person,” the chairman said, adding some shareholders were behaving in a way that could be described as “psychological terror.”  He said that included publicly spreading false statements and making unfair demands for management to step down.

U.S. Regulator Shelves Reform on Voting in Board Fights: Sources
" Reuters (07/11/18) Baker, Liana B.; Price, Michelle"

The Securities and Exchange Commission (SEC) has suspended a proposed Obama-era reform that would have changed how shareholders vote during contested board elections, according to sources. SEC officials have said in recent months that the proposed rule-change remains a priority, raising hopes for investors who have sought the changes—including Pershing Square's William Ackman—that the SEC will finalize and implement the rule soon. However, sources said the Commission’s new boss Jay Clayton has in fact shelved the proposal, in what will be a blow for many investors who believe the current system favors company management in board fights. Currently, shareholders voting remotely have to choose from a full slate of board directors nominated by management or a competing set of nominees provided by a dissident investor. They cannot mix and match from these competing lists unless they send a representative to vote in person at the annual meeting. According to the SEC, most votes in the U.S. are cast remotely, so such constraints can influence who ultimately ends up controlling the board and company strategy. Investors say this system works against them because shareholders are more likely to play it safe and vote for the management list, even if they like some of the dissident's candidates. Under the current administration, sources said, the “universal proxy” proposal is dead for the foreseeable future.

Under Pressure From Shareholders, BioCryst Drops Plan to Merge With Idera
" Endpoints News (07/10/18) Meiling, Brittany"

Durham, North Carolina-based BioCryst (BCRX) announced Tuesday that it is canceling its proposed merger agreement with Idera (DRA) following pressure from shareholders.  The firms announced the deal this spring in a bid to rebrand and focus on their combined rare disease programs. However, RA Capital Management—which owns a 7% stake in BioCryst—dubbed the deal “unnecessary and unjustified” in a letter in April and pledged to vote against it. The protest followed another objection letter from Great Point Partners in February. While the Idera management team’s expertise meant they could offer good advice to BioCryst, the fund wrote, the proposed merger wouldn’t help BioCryst’s ongoing Phase III trial for its lead product candidate BCX-7353, meant to treat hereditary angioedema. Nor would the merger lessen future financing burdens, they said.  In their view, the merger was unfair to all BioCryst shareholders but one: Baker Bros, the largest shareholder, which would see its 14% stake boosted to 16% in the new company.  At a special meeting of shareholders Tuesday, the merger was voted down.

Detour Gold CEO Clashes With Discordant Shareholder Paulson & Co.
" Globe and Mail (07/10/18) McGee, Niall"

The interim CEO of Detour Gold Corp. has blasted shareholder Paulson & Co. and declared that remaining as a standalone, and not selling the company, is in the best interests of shareholders. "[A sale] may benefit Mr. Paulson, but the shareholders I talked to aren't interested," Michael Kenyon said in an interview. Kenyon said he's spoken to most of the company's top shareholders and the "vast majority" are supportive of the plan to move forward with a costly expansion of its flagship mine in Northern Ontario. Last month, Paulson & Co., which owns 5.5% of the shares, urged Detour to sell itself after years of underperformance. Marcelo Kim, partner with Paulson & Co., said that a failure to initiate an official sales process is an indication of an "entrenched board looking out for its own interests, and not those of its shareholders." Kenyon denied suggestions that directors were entrenched, added that the board is open to selling the company; however, he warned that the company's share price could suffer long term damage if a sales process is a failure. Last month, Kim said that Paulson & Co. was considering calling for a shareholder vote to try to oust the board and nominate directors of its choosing, who would then push for a sale of the company. "We are continuing to consider all of our options to replace the board with one that is shareholder friendly and will drive real value for all stakeholders," Kim said on Tuesday.

Investor Seeks Vote to Appoint New Mears Chairman
" Reuters (05/10/18) Pratap, Bhanu"

Frankfurt-based Shareholder Value Management (SVM) has requested a shareholder vote to install Andy Hogarth as Chairman of Mears Group. The fund had previously sought to appoint ex-Staffline CEO Hogarth as an independent director at the British social housing and care company. Mears said last week that Chairman Bob Holt would resign next year after SVM demanded his exit, citing the company's underperformance.

N.Y. Bank Faces Threat From a Former Executive
" American Banker (07/10/18) Reosti, John"

Paul Hagan, the former CFO of Hanover Bancorp, is pushing the company to split the roles of chairman and CEO. In a June 29 letter, the investor argued that conflicts of interest prevent Michael Puorro, who is also president, from taking the necessary steps as chairman to boost shareholder value. “A primary responsibility of the chairman is to represent the interest of the shareholders, something that Mr. Puorro has not done since he is conflicted with protecting his job in management and not exploring opportunities in the capital markets to maximize shareholder value and enhance liquidity in Hanover’s stock,” he wrote. Hagan, who said he owns 3% of Hanover’s outstanding shares, urged the company to create a “liquidity event” by listing its shares on a stock exchange, conducting an initial public offering, or selling itself. Hagan said that Hanover’s market value of $55 million is significantly undervalued—by as much as $45 million—compared to similar sized community banks. He also objected strongly to issuing new shares. Puorro “is diluting existing shareholders by continuing to issue new stock at levels way below the peer group community bank market levels,” Hagan said. While he agrees about the need for a liquidity event, Puorro—who said he owns about 6% of the company's stock—said he disagrees with Hagan over the timing.

Stability Needed After CEO Exit, Say Thyssenkrupp Workers, Foundation
" Reuters (07/10/18) Steitz, Christoph; Inverardi, Matthias"

Thyssenkrupp's top shareholder, the Alfried Krupp von Bohlen und Halbach Foundation, which owns a 21% stake, said it and the company's workers will serve as an anchor of stability following the resignation of CEO Heinrich Hiesinger. The company's second-largest shareholder with an 18% stake, Cevian, has demanded that the company be simplified, grant more independence to its business units, and explore strategic options for them. However, Ursula Gather, head of the foundation, and Markus Grolms, trade union secretary at the IG Metall union and vice chairman of Thyssenkrupp's supervisory board, do not believe radical change is the answer. "The foundation and labor representatives have always stood up for the stability of the company. That will not change in the future," they said. The foundation and labor representatives together hold 12 of the 20 seats on the company's supervisory board, giving them a clear majority to block key strategic decisions. Both voted in favor of a merger with Tata Steel.

BlackRock, Other Big Investors Have Misgivings About Dell Offer
" Wall Street Journal (07/10/18) Lombardo, Cara"

Shareholders owning at least 10% of Dell Technologies Inc. (DVMT) shares—which track Dell’s controlling stake in VMware Inc. (VMW)—are disappointed with terms of the deal announced last week to buy them out, believing it undervalues the tracking stock, according to sources. The shareholders include several teams at BlackRock Inc. (BLK), as well as Farallon Capital Management LLC and Canyon Capital Advisors LLC. BlackRock is DVMT's third-largest shareholder with a 4.8% stake, while Farallon and Canyon own about 3.5% and 1.5%, respectively, according to FactSet. DVMT stockholders are being offered roughly $109 a share, about a 29% premium over the price before the deal was announced. DVMT shares have been trading at a significant discount to the VMware shares they are meant to track and several of the shareholders believe the offer should go further toward closing it. A deal at about $120 a share would still represent a roughly 20% discount. Elliott Management Corp., the fourth-largest DVMT investor with a roughly 4% stake, is still reviewing the deal and hasn't decided whether to support it, sources said. Opposition from as little as 30% of shares could jeopardize the deal at a vote in October. Dell is meeting with shareholders now to try to gain their support, sources said. Carl Icahn, who built undisclosed stakes in both DVMT and VMware in recent months, reportedly is unlikely to push Dell to sweeten the deal, but had not completely ruled out opposing it.

Hammerson Under Pressure as Elliott Increases Stake
" Financial Times (07/10/18) Evans, Judith"

Elliott has upped its stake in U.K. shopping center landlord Hammerson to 5.3%, becoming its fifth-largest shareholder. The move comes as the company prepares to present a new strategy to shareholders on July 24. Hammerson has had a difficult year, launching and then withdrawing from a proposed £3.4 billion takeover of smaller rival Intu (INTU), while rebuffing approaches from France’s Klépierre. Hammerson in April spurned a cash-and-shares offer from Klépierre worth 635p a share, saying it undervalued the company. But Hammerson’s share price has since fallen to 542p, while Klépierre’s has risen. Elliott first disclosed a stake of 1.5% in April, held through derivatives known as contracts for difference (CFDs). It seeks to put pressure on Hammerson to show how it can create more value for shareholders ahead of Oct. 13, when Klépierre could renew its bid under takeover rules. As the retail industry experiences structural upheaval amid online competition, a number of U.K. retailers have shuttered stores and reduced rents in “company voluntary arrangements” this year as they seek to avoid bankruptcy. However, Hammerson could consider strategies including share buybacks funded by disposals of indemand assets, said a source. It could also reportedly reconsider a planned extension that is set to double the size of the Brent Cross shopping center.

Germany Blames the Locusts Again
" Bloomberg (07/10/18) Bryant, Chris"

Observers note that following Heinrich Hiesinger's resignation as CEO of ThyssenKrupp AG last week under pressure from investors, there was talk of "locusts," which in Germany refers to the evils of Anglo-Saxon capitalism. ThyssenKrupp's chief labor representative warned that a "locust-style" breakup must be resisted, likely referring to Cevian Capital and Elliott Management Corp.'s pressure on the company to change. However, observers say it is misguided to blame the hedge funds for unraveling the industrial conglomerate. "If a business cannot consistently generate a return in excess of its cost of capital, it might as well pack up and go home. ThyssenKrupp has been failing to do that for years," writes Bloomberg columnist Chris Bryant. "Similarly, it's reasonable to ask whether a company that spans submarines, industrial plants, and auto parts has become too complex to manage." He says Hiesinger resisted a full-scale breakup, which looks more likely now that he is gone. Bryant noted that "activist funds can be useful stakeholders too. The more patient investment approach of Sweden's Cevian is hardly in the locust category, and all companies that want to be around for the long run need to earn their keep and take their shareholders seriously...Germany should recognize that not all activists are out to wreck its industrial base."

21st Century Fox Set to Increase Bid for Sky
" Australian Business Review (07/10/18) Duke, Simon"

21st Century Fox (FOXA) is preparing to bid £25 billion ($44.3 billion) for Sky, of which it already owns 39%, in an attempt to edge out Comcast (CMCSA) in the battle for the British broadcaster. The company is expected to bid more than £12.50 a share for the 61% of Sky that it does not already own, topping Comcast's offer. Sources said Comcast also is likely to publish its formal offer for Sky in the coming days. Several hedge funds, including Elliott and Odey Asset Management, have amassed sizeable holdings in Sky. Observers say 21st Century Fox's enhanced bid will significantly raise the stakes in the fight between two of America's biggest media conglomerates. Both Disney (DIS)—which last month secured a takeover of the bulk of 21st Century Fox's empire for US$71.3 billion—and Comcast are vying for a control of the majority of 21st Century Fox's entertainment assets. If 21st Century Fox succeeds in buying all of Sky, Disney would end up owning the pay-TV giant, so long as Comcast does not edge ahead in the battle over Sky. Analysts believe Disney, via 21st Century Fox, and Comcast will end up paying far more than Sky's present share price of £14.685.

Lowe's Cuts COO Job in Management Overhaul
" Financial Times (07/09/18) Yuk, Pan Kwan"

Lowe's (LOW) has announced that it is overhauling its management structure. Investors have been calling on the home improvement retailer to take steps to improve its performance. Pershing Square revealed that it took a $1 billion stake in Lowe's just days after the company named Marvin Ellison as its new chief executive officer in May. Ellison replaced Robert Niblock, who was also chairman of Lowe's. Niblock announced in March that he would retire after 25 years at Lowe's, including 13 as head of the company. Lowe's also bent to investor pressure in January when it agreed to add three new directors to the board following "constructive discussions" with DE Shaw. Lowe's is eliminating the positions of chief operating officer, chief customer officer, corporate administration executive, and chief development officer. Other senior executives who report directly to Ellison will assume the responsibilities of the eliminated positions.

Premier Foods Investors Square Up in CEO Re-Election Battle
" Reuters (07/10/18) S, Sangameswaran"

Oasis Management has nearly doubled its stake in Premier Foods in a bid to vote out CEO Gavin Darby at the British food company’s annual meeting next week. However, Nissin Foods Holdings—Premier Foods’ top shareholder with a 19.75% stake—intends to vote in favor of Darby, Premier’s spokesman said. Premier’s statement came after second-largest shareholder Oasis upped its stake to 17.3% from 9.09% and said it was confident that Darby would not be CEO after the meeting on July 18. The investor said it will vote all of its shares against Darby’s re-election. U.S. hedge fund Paulson & Co., which owns a 6% stake in Premier, on Monday joined calls for Darby to step down, saying that the company is in desperate need of new management. Meanwhile, shareholder advisory firms ISS, Glass Lewis, and Pensions & Investment Research Consultants have advised shareholders to re-appoint Darby. Oasis has more work to do to win further shareholder support, said Investec analyst Nicola Mallard, adding that the combined 23% stake held by Oasis and Paulson is not enough to remove Darby. Last week Oasis also called for Premier to sell its well-known Batchelors soup brand to improve its financial outlook and create funds for investment. Premier spurned the call, saying it would not sell one of its “jewels.” Premier has a partnership with Nissin for its Batchelors noodles products, sales of which are growing by 11% a year.

Banca Carige Investor Asks for Shareholder Meeting to Remove Board
" Reuters (07/10/18) Landini, Francesca; Flak, Agnieszka"

Raffaele Mincione, an investor in Italian lender Banca Carige, has requested a shareholder meeting this fall to vote on replacing the board.  The move comes after three board members resigned in recent weeks over disagreements about how the Genoa-based bank is run. Carige has long suffered corporate governance issues, and investment bankers say concerns about possible shareholder battles complicate its search for a merger partner. Mincione became one of Carige's top shareholders with a 5.4% stake this year, but failed to win a board seat. He argued that Carige's governance had “suddenly deteriorated,” jeopardizing the implementation of restructuring measures approved by the European Central Bank. The bank said that Mincione's requests would be discussed at a board meeting on Tuesday. Carige struggled to pull through a cash call requested by regulators at the end of last year. Under CEO Paolo Fiorentino, the bank is working to reduce the burden of bad debts. The CEO clashed with former Chairman Giuseppe Tesauro, who claimed that Fiorentino was acting too independently and wanted to turn Carige into a public company where “he alone has a say.” Investment bankers have also voiced concerns about the influence of top shareholder Vittorio Malacalza, who owns 20.6% of Carige and played a role in the exits of the last two CEOs.

Deutsche Bank Hires Investor Cerberus for Paid Advisory Work
" Wall Street Journal (07/10/18) Strasburg, Jenny"

Deutsche Bank DB has retained Cerberus Capital Management LP—a private-equity firm with a roughly 3% stake in the embattled lender—as a paid adviser to help it address rampant costs and improve slumping profits. Cerberus’s appointment comes as CEO Christian Sewing works to resuscitate the German bank’s fortunes after three straight full-year losses, market-share drops, and strategic upheaval. Cerberus President Matt Zames, the former COO of JPMorgan Chase & Co., is leading the advisory team working with Deutsche Bank, a Cerberus spokesman said. As a private-equity investor, Cerberus often gives advice for a fee to its portfolio companies. The newly revealed arrangement with publicly traded Deutsche Bank makes Cerberus its only shareholder in a paid advisory role, formally bringing a firm with a stake inside the bank’s operations, according to sources. Cerberus is expected to be restricted from exchanging Deutsche Bank shares while it is advising the bank, in keeping with securities laws. The firm has not engaged as an activist investor with its Deutsche Bank stake, sources say, and will not be able to do so for a year after its consulting role ends. Cerberus plans to remain a long-term Deutsche Bank shareholder and has said privately it supports Sewing and his management team, according to sources. Last year, Cerberus became a roughly 5% shareholder in rival German lender Commerzbank AG, sparking speculation that the two banks might eventually merge—though sources say this is not something they’re actively planning for.

Supervalu and Blackwells Solicit Shareholders as Feud Escalates
" Minneapolis/St. Paul Business Journal (07/09/18) Rehkamp, Patrick"

Supervalu Inc. (SVU) and Blackwells Capital are lobbying shareholder groups for support ahead of a meeting next month that will decide the fate of the board. Blackwells, which owns a roughly 7.3% stake in company and is seeking six seats on the nine-member board, released a filing Monday promoting its slate of board nominees. "The professionals we have nominated have studied Supervalu's businesses carefully and have specific suggestions and initiatives to discuss with shareholders and management," Blackwells said. "The current board has, in our view, continued to prove itself to be unimaginative, intractable and lackadaisical stewards of the company, to the great detriment of Supervalu's shareholders." Blackwells also suggested that if its board members are elected, a sale of the company is possible. One of the priorities the investor proposed is "carefully reviewing, and objectively assessing, all avenues of value creation, including those that involve strategic transactions." Supervalu responded with a filing of its own, arguing that its current board and management have already made major changes—such as selling off discount grocery chain Save-A-Lot and various real estate holdings—and claimed Blackwells was trying to seize control without paying a premium to all stockholders. The battle will come to a head at the shareholder's meeting on Aug. 16.

Investor 'Disappointed' With Brookdale Board
" Nashville Business Journal (07/09/18) Stinnett, Joel"

Land and Buildings Investment Management LLC has been criticizing the management of Brookdale Senior Living Inc. (BKD) for months, and now it is taking aim at Brookdale's board of directors. In a letter to shareholders issued July 9, Land & Buildings CIO Jonathan Litt outlined seven steps the board should take to maximize shareholder value. Land & Buildings previously made the recommendations in private but Litt said he was "disappointed with the lack of urgency" on the part of the board to implement them. Land & Buildings began its public calls for structural change at the company in 2016, repeatedly urging Brookdale to sell off its real estate holdings following financial struggles and dropping share prices as the result of a merger with Seattle-based Emeritus Corp. In February, following a strategic review, Brookdale CEO Andy Smith stepped down and was replaced by CFO Cindy Baier. Land & Buildings has since praised that move as well as Baier's performance. However, Litt said July 9 that "substantial work needs to be done to modernize the company's corporate governance." He called for the board to ask two long-standing board members to resign and be replaced with individuals with relevant healthcare experience. He also called for the appointment of a finance-oriented board member to its investment committee, and said the committee should weigh ways to maximize the value of the company's real estate, including joint ventures, sales, or splitting up the company.

Whispers Get Louder Over BHP's US Shale Sale—But One Group Is Strangely Quiet
" Sydney Morning Herald (Australia) (07/09/18) Knight, Elizabeth"

Bids for BHP's (BBL) U.S. onshore shale assets close at the end of the month. BP (BP) reportedly has the biggest offer on the table at more than US$10 billion, and Chevron (CVX) and Shell (RDS.A) reportedly are still in the race. Meanwhile, Elliott Management, which owns 5% of BHP, is remaining silent on the issue as it has a lot riding on the success of the shale auction. Elliott appears to have amassed its stake in BHP when the stock was trading closer to $20, and today the share price sits at around $33.80. The hedge fund successfully pushed to get the sale on the company's agenda, and now it will focus on unifying BHP's current dual-listed structure. Elliott has argued that the valuation lift from unification would be as high as US$22 billion, but BHP disputes the size of the benefit and contends that the costs would outweigh the benefits.

The Stilwell Group Sends Second Letter to Shareholders of Wheeler Real Estate Investment Trust
" Markets Insider (07/09/18)"

One of the largest shareholders of Wheeler Real Estate Investment Trust Inc. (WHLR), the Stilwell Group, sent an open letter to the company's shareholders on July 9, stating that it will run for three of six board seats held by legacy directors at the upcoming annual meeting. The letter cites the destruction of value that has occurred at the company. "In January, WHLR issued 1.4 million shares of Series D, $25 Convertible Preferred Stock at an $8.50 discount to face value, something I've never seen occur at even a reasonably healthy company in my 35 years of working on Wall Street. This resulted in an immediate destruction of more than $12 million dollars for the common shareholders, and it has exposed WHLR common holders to potentially even worse consequences in the future. The transaction this financed was completely voluntary; hence, it appears to have been completely foolhardy," wrote the Stilwell Group's Joseph Stilwell. "While Jon Wheeler has since been fired, six legacy directors remain on the Board: Stewart Brown (placed on the Board by Westport Capital Partners LLC), David Kelly, John McAuliffe, Carl McGowan Jr., John Sweet, and Jeffrey Zwerdling. We're going to attempt to retire at least half of them."

Mears Chairman Bob Holt to Step Down Following Shareholder Pressure
" Reuters (07/06/18) Awasthi, Shashwat"

Mears Group announced Friday that Chairman Bob Holt will not stand for re-election at the company’s annual general meeting in 2019. The move comes two days after Shareholder Value Management (SVM) called for Holt's ouster due to the company's underperformance. The Frankfurt-based investor owns 8.93% of Mears. The company said it had received a notice to requisition a general meeting with proposals to fire Holt from its board and install an alternative candidate as non-executive director. “We are determined that all Board appointments should follow a proper due process and not be imposed on us by a single shareholder,” said CEO David Miles.

Investor Snobr Sees CEZ Upside as Nuclear Risk Spooks Market
" Bloomberg (07/08/18) Chamonikolas, Krystof"

A shareholder group believes Czech power company CEZ AS is undervalued and that the state-controlled power generator will thwart government pressure to fund nuclear expansion on its own. Michal Snobr—who has long been critical of CEZ’s management and represents four shareholders together owning more than 1% in CEZ—says the company could benefit from burgeoning electricity prices more than competitors once worries about political risks disappear from investors' assessments of the stock. “I believe this discount will evaporate once politicians realize it’s practically and legally impossible to somehow force CEZ to make self-destructive investments in new reactors,” Snobr said. “The Czech legal framework is robust enough to protect minority owners’ rights.” Snobr says the company should either split its assets to let the state move forward with the nuclear projects, or remain in one piece and extend the life of existing reactors, build gas-fueled power stations, and invest more in renewables. This marks the latest example of investors across Europe pressuring power companies for shakeups as governments act on pollution and as ever-cheaper renewables change the traditional business model. Meanwhile, the Czech government this year rejected an assets split proposed by CEZ, one of the reasons for a negative view of the stock among some investors.

Shareholders Back Calls for Premier Foods Chief to Go
" The Telegraph (United Kingdom) (07/07/18) Marlow, Ben"

Several of Premier Foods’ top shareholders are seeking the removal of CEO Gavin Darby ahead of the annual general meeting on July 18. Oasis Management, which owns a 9.3% stake, has led the campaign to oust Darby, blasting him for “years of persistent shareholder value destruction and poor financial performance.” It has also attacked Darby’s pay, and last week urged the company to spin off its Batchelors soup and noodle brand to raise cash to pay down debt. Paulson & Co., which owns a 6.2% stake in the company, backed the campaign to remove Darby, saying he had failed to deliver on a promise to create shareholder value after spurning a takeover bid from U.S. spice maker McCormick (MKC) in 2016 and selling a large stake to Japan's Nissin instead. “Today, the stock languishes at 40p while the management and the board keep their comfortable jobs,” said Orkun Kilic, a portfolio manager at Paulson. “The company desperately needs new management who are willing to put stakeholders' benefits first and we hope this upcoming AGM will be a reflection point.” Another top-10 shareholder said, “We plan to vote against Gavin Darby's re-election. After the failed McCormick bid, we don't think he can be trusted. He failed to engage with shareholders over the offer and instead agreed a deal with Nissin that benefited one shareholder but penalised the rest. He then put out targets which have not been met.”

Paulson Takes Bigger Slice of Britain's Premier Foods
" Reuters (07/09/18) S, Sangameswaran"

Paulson & Co. has tripled its stake in Britain’s Premier Foods Plc, making it the third-largest shareholder ahead of an annual meeting next week that could decide the fate of CEO Gavin Darby. The hedge fund said it owned 6.08% of Premier Foods as of July 6, up from 1.99% disclosed earlier. Darby has been asked to resign by the company’s second-largest shareholder, Oasis Management, which has urged shareholders to oppose his re-election at the annual meeting. Meanwhile, shareholder advisory firms Institutional Shareholder Services, Glass Lewis, and Pensions & Investment Research Consultants have backed Darby. Premier Foods has been under shareholder pressure since it spurned a 65 pence per share takeover offer from U.S. food-maker McCormick (MKC) in 2016. Its shares traded around 40 pence on Monday. Japan’s Nissin Foods is the company's top shareholder with a 19.5% stake.

Stobart Board Blocks Re-Entry of Ex-Boss as Chairman Survives Shareholder Vote
" Belfast Telegraph (Ireland) (07/09/18)"

Stobart Chairman Iain Ferguson barely kept his board seat at the annual general meeting on Friday, with nearly 49% of shareholders voting against his reappointment—just missing the threshold needed to oust him. Shareholders also backed a resolution to appoint former CEO Andrew Tinkler as a director, after he was fired as CEO last month. However, the board blocked Tinkler's appointment, saying it was not in the company's best interests for him to become a director. Tinkler was fired for leading an effort to oust Ferguson and replace him with retail boss Philip Day. Tinkler was then hit with a legal battle for breach of contract and breach of fiduciary duty. Warwick Brady, Stobart's new CEO, said Tinkler had threatened to “destabilize the company.” On Monday, Ferguson said the company will now work to unite its shareholders. “Andrew Tinkler will not be part of this process—the board has taken the decision again to dismiss him, following the passing of his resolution to be elected as a director of the company,” he said, citing his “breach of fiduciary duty and the impending court cases against him.”

RPM International Streamlines Senior Executives as Chief Operating Officer Retires
" Akron Beacon Journal (OH) (07/06/18)"

RPM International Inc. (RPM) President and COO Ronald Rice is retiring as the company streamlines its leadership structure. Effective immediately, all group presidents will report directly to Chairman and CEO Frank Sullivan. The move is one of the initiatives geared "to drive greater operating efficiency across the organization," the company said. Elliott Management Corp. has been working with RPM to review and improve the company's operations and drive up its stock price. RPM on June 28 said it agreed to grow its board of directors to 14 by adding two Elliott-backed representatives.

Thyssenkrupp Board to Seek New CEO After Hiesinger Quits
" Reuters (07/06/18) Käckenhoff, Tom; Sheahan, Maria; Steitz, Christoph"

Thyssenkrupp said it will take its time to replace CEO Heinrich Hiesinger, who resigned less than a week after forging a landmark joint venture with India's Tata Steel following two years of negotiations. Shareholders Cevian and Elliott—which hold around 18% and less than 3% of shares, respectively—had criticized the company's performance under Hiesinger, as shares have fallen 28% since he took the helm in January 2011. Rather than appoint an interim CEO, Thyssenkrupp has asked its remaining executives—Guido Kerkhoff, Oliver Burkhard, and Donatus Kaufmann—to lead the company for now. Chairman Ulrich Lehner said, "In this difficult situation it is most important now for the company to remain on course." Meanwhile, a company statement said, "The succession to Dr. Heinrich Hiesinger as Chief Executive will follow in a structured process."

Red Oak Partners Sends Letter to Board of Educational Development Corporation
" PR Newswire (07/06/18)"

Red Oak Partners, LLC has sent a letter to the board of Educational Development Corp. (EDUC) expressing serious concerns with its “troubling” corporate governance practices, board makeup, and misaligned management incentive plan proposal. It plans to oppose the election of the Class II directors and the proposed management equity incentive plan at the upcoming annual meeting slated for July 24. Red Oak is the company’s biggest outside director with a 7.7% stake. Among its concerns with the company’s corporate governance practices, Red Oak pointed out the lack of term or age limits on the board, the combined Chairman and CEO role, and the lack of board oversight in recent years. While Red Oak is not seeking control of EDUC at this time, if the board fails to meaningfully engage with it about its concerns, the investor will have little choice but to propose its own slate of nominees at the 2019 annual meeting.

Hudson's Bay Confirms Talks Over European Joint Venture
" Retail Dive (07/06/18) Unglesbee, Ben"

On July 6, Hudson's Bay Co. (HBC) confirmed that it is exploring a possible joint venture with Signa Holding, which operates one of the company's biggest European competitors and last year offered to buy HBC's German unit. In a statement to investors, HBC said it had "signed a non-binding letter of intent with respect to the exploration of a potential joint venture" with Signa. However, any potential deal is contingent on many factors and the approval of the board. Land & Buildings had called on HBC to "seriously consider" Signa's acquisition offer, which HBC ultimately found too low.

Thyssenkrupp CEO Resigns Under Growing Shareholder Backlash
" Bloomberg (07/05/18) Wilkes, William; Henning, Eyk"

Thyssenkrupp AG’s CEO Heinrich Hiesinger stepped down after seven years, following shareholder pressure over the company’s waning revenue and share price. Elliott Management Corp. and Cevian Capital, which control roughly 20% of the company, approve of Hiesinger's decision to resign and favor bringing in a new CEO who could enact more sweeping changes at the German industrial giant, according to sources. News of his departure came days after Thyssenkrupp and Tata Steel Ltd. finalized a deal to set up a European steel colossus, an arrangement that faced increasing opposition from investors and labor unions and put Hiesinger at odds with Thyssenkrupp's board. Hiesinger faced criticism from investors including Cevian for not working fast enough to simplify Thyssenkrupp's complicated structure, which runs from submarines and elevators to food packaging and steel. Shareholder dissatisfaction intensified this year after Elliott took a stake in the company and pushed for more radical changes, while opposing Hiesinger's leadership. “We view Hiesinger's departure as a sign of a growing divergence in vision between management and an increasingly disenchanted supervisory board spurred on by two activist investors, Cevian and Elliott,” wrote Jefferies analysts including Seth Rosenfeld. Hiesinger's exit will drive speculation that bigger changes will follow, including the possibility of a broader break up or spin off of the highly profitable elevator division, according to Jefferies.

Oasis Management Responds To ISS Report On Premier Foods
" Business Wire (07/05/18)"

Oasis Management acknowledged the report by proxy advisory firm Institutional Shareholder Services (ISS) about Premier Foods plc and its "qualified support" for CEO Gavin Darby. The investor encourages all shareholders to read the full 34-page report, believing its conclusions do not reflect its content. "Although we respectfully disagree with ISS’ ultimate conclusions in this case, for proper context, we understand that ISS has never supported a requisitioned resolution to remove a UK Executive Director brought by an active shareholder, and we do acknowledge that a report as critical as this about Premier Foods and in particular CEO Gavin Darby is fairly exceptional in and of itself." Oasis agrees with several points in ISS's analysis, including that executive pay is excessive and that "the merits of the company's current strategy are debatable." Oasis also notes that ISS expresses unenthusiastic support for Darby, with its report stating that "the Company's performance record under Darby's leadership is not particularly compelling," that "Premier Foods has generally underperformed peers over the five years of CEO Gavin Darby's tenure," and that the company has "exhibited minimally acceptable operating performance" under his leadership. Oasis said it is confident that other independent shareholders share its concerns and that there is wide-ranging support for the ouster of Darby as CEO. "Although the Premier Food Board continues to stand by Darby despite the failures under his leadership, we urge you to exercise your rights as shareholders to change the direction away from this zombie company to a healthy, growing business that will benefit all shareholders."

Mears to Call Investor Meeting After Move to Oust Chairman
" Independent (Ireland) (07/05/18) Williams, Holly"

Mears Group confirmed it received a request on July 4 from Frankfurt-based Shareholder Value Management (SVM) to remove Chairman Bob Holt amid concerns over the underperformance of its share price, and said it would call a meeting with shareholders within 21 days of the request and hold the meeting within 28 days. The company advised shareholders to "take no action at this time." SVM, which owns an 8.9% stake in Mears, wants to replace Hold with former Staffline CEO Andy Hogarth. The investor believes Holt is "unable to devote sufficient time" to Mears as he holds 10 board seats and six chairmanships. Further, SVM says his lack of independence, given his 21 years at the company, has "led to sub-optimal decision-making at the board level" and is behind the share price underperformance. Mears has seen its shares fall 25% in the past year, and an SVM spokesman noted that "it has become clear that the current chairman lacks the will to enact much needed change that only a new independent chairman can bring."

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'Medical Check-Ups': Japan Firms Tap Banks for Advice as Activists Circle
" Reuters (07/19/18) Wilson, Thomas; Tomisawa, Ayai"

Japanese companies are increasingly hiring investment banks and public relations firms for advice on dealing with activist investors. Among those advising boards on how to engage such investors are Morgan Stanley and Bank of America Merrill Lynch. Japan was the top destination in Asia for activist campaigns last year, according to a report by JP Morgan, with investors focusing on low valuations and cross-shareholdings in the country. The growing number of firms seeking advice shows a shift is underway in Japan's attitude toward activists, from one of resistance to legitimate engagement. “It is like a regular medical check-up: we do it regularly for Japanese clients even before they are approached by an activist,” said Akihiko Manaka, head of Japan mergers and acquisitions at Bank of America Merrill Lynch. “We offer Japanese clients analysis to look at the industry benchmark in terms of financial statistics as well as corporate governance and shareholding structure.” A sense that executives are more prepared to listen is encouraging more activists to enter the scene, analysts said. And emboldened by the government's governance push, activists have become increasingly vocal in their demands for change. Seth Fischer, founder of Oasis Management, has over the past 18 months used more public tactics to push companies for change. “Every engagement starts soft but if we don't get meaningful dialogue, we escalate to writing letters, then setting up websites and maybe going as far as proxies and lawsuits,” he said. “Companies are engaging more and they're asking banks to help them figure out how to address our concerns, which hopefully means they'll meet us somewhere in the middle.”

Who's Behind Blackwells Capital, a Supervalu Investor?
" Minneapolis/St. Paul Business Journal (07/18/18) Rehkamp, Patrick"

Blackwells Capital has launched blistering attacks on Supervalu (SVU) over the past several months as it tries to win control of the company's board. The New York City-based alternative investment-management company is run by 38-year-old Jason Aintabi. In an interview with the Minneapolis/St. Paul Business Journal, the CEO of Blackwells Capital described Supervalu as a very important company with totally broken leadership. "Our job here is to replace and strengthen leadership, leaders that are going to own the company and stand by it," according to Aintabi, who zeroed in on Supervalu more than a year ago. In filings, Aintabi said that if he succeeds at getting control of Supervalu's board, it is possible the company could be sold outright. Aintabi also has said he will get rid of the various hedge instruments that he holds on Supervalu should his board nominees get selected. The vote on the board slate is scheduled for Aug. 16 at Supervalu headquarters.

Investors Smell Action at Germany's Top Bet
" Wall Street Journal (07/17/18) Wilmot, Stephen"

Thyssenkrupp has lost both its chairman and CEO in recent weeks, with both men indicating that they had lost key shareholder support. Cevian, which owns 18% of the company, and Paul Singer's Elliott Management, which announced a small stake in late May, are said to have pushed for a breakup but have not publicly laid out their case. Meanwhile, the philanthropic foundation that is the German company's biggest shareholder with a 21% stake, has indicated through its chairwoman, Ursula Gather, that it wants to "preserve the unity of the company as far as possible." However, Thyssenkrupp's elevator unit could be merged with Finnish specialist Kone, and German press reports indicate that Gather met with Kone's key shareholder two years ago. The company's former management team opposed the deal, but now that they are gone, a merger could be possible, and the company's shares rose 9% on the morning of July 17 following the announcement of the chairman's resignation on July 16. Observers note that Thyssenkrupp could post substantial gains if it can bring its margins in line with peers, and more radical options may be on the table with the help of the company's investors.

Video: Could Pershing Square CEO Bill Ackman Be Making a Comeback?
" CNBC (07/16/18)"

In this video, several experts including Joe Terranova of Virtus Investment Partners, Steve Weiss of Short Hills Capital Partners LLC, Jim Lebenthal of HPM Partners, and Josh Brown of Ritholtz Wealth Management join CNBC's Leslie Picker and Scott Wapner to analyze Barron's bullish case.

The Scourge of Japan's Boardrooms Turns Peacemaker With Big Win
" Bloomberg (07/16/18) Redmond, Tom; Sano, Nao"

After years of waging activist campaigns in Japan’s boardrooms, Yoshiaki Murakami is being hailed by executives as a peacemaker. Murakami—a champion of shareholder rights before his conviction for insider trading—played a key role in the merger of refiners Idemitsu Kosan Co. and Showa Shell Sekiyu K.K. He served as a consultant to Idemitsu's founding family, whose spat with executives obstructed the deal’s progress, and convinced them to accept the integration with concessions for shareholders. So important was his intervention that Idemitsu Chairman Takashi Tsukioka publicly praised Murakami at a press conference in Tokyo last week. “I think it’s a good thing, I really do,” Murakami said of the resolution, speaking in a rare interview after years of avoiding the media. “This merger contributes to Japan’s energy security.” Idemitsu and Showa Shell shares have jumped since reports last month that the merger, first terminated nearly four years ago, was back in play. The two companies will now combine in 2019. Murakami is also likely to see a solid return on his investment in Idemitsu, though he says he only purchased stock so he could enter the talks as a fellow shareholder. Idemitsu's founding family was always looking out for the company's interests, according to Murakami, and its position was never that far from the oil refiner's. He says the firm's executives should have explained the situation better. “There was a slight misunderstanding between the company and the founding family,” he said. “I realized there was no big gap after I talked to management.”

At Last, Japan Starts Snipping Its Dead Wood
" Financial Times (07/15/18) Mooney, Attracta"

In the six years since Japan's prime minister, Shinzo Abe, put corporate governance at the center of his plan to reform the economy, observers say companies and investors have been slow to address such issues as conflicts of interest, underperforming CEOs, and a lack of diversity. "Corporate Japan is changing, there is no question about it. But if you look at it from the governance lens, and ask if those changes are fast enough, [they] have not taken place to anywhere near the degree as if it were an American or European business," said an international investor, which also takes activist positions. "It is still very difficult to remove anyone on a board or a CEO. As long as that is true it is going to be a frustrating situation for shareholders who want change." According to a report on Japan's top 500 businesses by CLSA Securities, every underperforming CEO—defined as a return on equity of less than 5% over five years—kept their jobs this year as shareholders failed to vote against management. "People just don't want to rock the boat," says CLSA Japan strategist Nicholas Smith. Meanwhile, the report found that nearly every shareholder proposal this year was rejected. However, Ryohei Yanagi, CFO at Eisai, noted that "rejection is on the rise. Investors are more willing than ever to vote against CEOs that are value destroyers."

Bill Ackman's Comeback: How to Ride His Revival
" Barron's (07/13/18) Bary, Andrew"

Bill Ackman could be making a comeback after big public losses and an exodus of investors in recent years. Ackman's publicly traded investment vehicle, Pershing Square Holdings, has risen more than 20% from a March low, based on its asset value, and through July 10 is up 10.4% on the year—about double the return on the S&P 500 index. The depressed shares of the closed-end fund offer an affordable way to ride what appears to be Ackman's revival. The shares go for about $15 on the Euronext Amsterdam exchange, a 22% discount from their underlying net value exceeding $19. Pershing Square Holdings was battered by its long position in Valeant Pharmaceuticals International (VRX) and short bet against Herbalife Nutrition (HLF). The fund lost 20.5% in 2015, 13.5% in 2016, and 4% last year, but Ackman is betting on the closed-end fund. Ackman has purchased $292 million of its shares since early May to give him a 13% stake, and he has taken other steps to narrow the discount on the stock. The purchases reflect the view that the fund "is substantially undervalued," the firm said in a statement.

Opinion: Activists Can Keep Check While CEOs Build Sandcastles
" Financial Times (07/13/18) Braithwaite, Tom"

Young entrepreneurs in the tech industry are reading "Extreme Ownership: How U.S. Navy Seals Lead and Win." Authors Jocko Willink and Leif Babin define "extreme ownership" as taking charge and holding yourself accountable. Managers at more established U.S. companies often practice extreme ownership, but they also come under fire from corporate governance experts over the role of the chief executive officer. According to a new report from Equilar, 38 of the top 500 U.S. public companies last year had proposals to install an independent chairman, and all failed. Most shareholders are content to give the CEO a sandbox if he builds a nice enough castle, writes Tom Braithwaite. In the U.K., independence is deemed essential by the corporate governance code, but this does not seem to help performance, considering the top four companies in the S&P 500 are worth more than the entire FTSE 100. Still, activists can provide a more important check than a chairman, as a new report from Lazard shows they spent $40 billion targeting 136 large companies last year. That is the most since Lazard starting tracking the amount in 2013 and is likely the most ever.

Progress on Gender Diversity Stalls at U.K.'s Biggest Companies
" Financial Times (07/16/18) Murphy, Hannah"

New research from the Pipeline, which trains women for senior roles, found women accounted for only 16% of executive committees at FTSE 350 companies at mid-April this year, unchanged since 2016. The report also found that only 5% of U.K. executives with "profit-and-loss responsibilities"—upper-level executives who manage the company's budget—were women in 2018, down from 6% the previous year. The results leave many wondering whether government-backed gender diversity targets, which include women making up one-third of boards and executive committees of FTSE 350 companies, can be met by the 2020 deadline. Last month, a review found that U.K. companies would need to appoint women to 40% of their board positions over the next two years to meet the target.

Activist Investors Turn Up Heat in Drive for Returns
" Wall Street Journal (07/12/18) Lombardo, Cara"

Activist investors are launching campaigns at a record pace, according to a new study by Lazard. Activists spent $40 billion engaging 136 companies with market values of more than $500 million in the first half, the most since the investment bank started collecting the data in 2013. Only 94 companies faced new activist pushes by this time in 2017. In addition, activists won a record 119 directorships in the first half—a 75% hike from a year earlier—and they are increasingly looking for control of boards, the data show. As the investors become more mainstream, big asset managers like T. Rowe Price Group Inc. are more open to supporting them, and directors are more open to dialogue as well. “Boards are feeling more pressure because actively managed funds are increasingly supportive of activist campaigns,” said William Anderson, an investment banker at Evercore Inc. As a result, companies and activists more often reach deals to avoid proxy fights. Activists won 85% of their board seats this year through settlements, according to Lazard. These successes have encouraged more investors to experiment with activism: nearly 20% of new campaigns this year have been launched by first-time activists. As active stock pickers fall behind passive investors, the appeal of activist investors and their ability to effect stock-enhancing change has grown, said Greg Taxin of Spotlight Advisors LLC, who recently worked with Blackwells Capital LLC in its campaign at Supervalu Inc. (SVU). “Activism has proven over a long stretch of time to be an effective way to generate alpha,” said Taxin. “In a world where active stock picking is viewed skeptically by many, this strategy has an understandable explanation for why it ought to outperform.”

Investors Want to Change Corporate Governance Rules for Tech Powerhouses
" Variety (07/11/18) Spangler, Todd"

Tech companies like Facebook (FB), Google parent Alphabet (GOOGL), and Snap (SNAP) have similar multi-class stock structures that give their founders full control over their businesses, and Netflix's (NFLX) company bylaws require supermajority votes by owners of all outstanding shares to make any changes in corporate governance. With the Facebook scandal involving Cambridge Analytica, investors are turning their attention to the issue of corporate governance and taking aim at structures that give company heads much of the power. According to investor and shareholder advocate James McRitchie, "I think Facebook wouldn't have been so insular, and might have paid more attention [to the Cambridge Analytica issue], if the board were more independent." Facebook Chairman and CEO Mark Zuckerberg controls 60% of the voting power. "There never is really a situation where this makes sense. You could make excuses, but what it does is eliminate accountability," says Charles Elson, professor of finance at the University of Delaware. Meanwhile, at Netflix, investors have voiced frustration that the board is not receptive to their concerns and that there is a lack of racial diversity among directors. However, Lawrence Cunningham, corporate governance professor at George Washington University, indicates that as long as Netflix continues to deliver strong results, "a lot of shareholders will say, 'Well, it's not the best board in the world, but I can live with it.'"

NYSE Opposition to Trading-Fee Review Puts Companies and Some Shareholders at Odds
" Wall Street Journal (07/11/18) Morgenson, Gretchen"

Stock exchanges are creating tension between big listed companies and their top shareholders over regulators’ efforts to examine the controversial practice of assigning fees and rebates to stock trades. At issue is a Securities and Exchange Commission (SEC) proposal to study the system known as “maker taker,” in which exchanges charge fees for some trades and pay rebates on others. Both the New York Stock Exchange (NYSE) and Nasdaq Inc. (NDAQ) oppose the proposal, saying it is flawed and doesn’t accurately assess costs. In a June email, the NYSE told its listed companies the proposal “could impact trading in your stock” and urged them to write letters arguing against it if they were concerned. By early July, over 24 companies had penned letters to the SEC criticizing the pilot or asking to have their stocks excluded from it. But many of these same companies' biggest investors disagree. More than three-quarters of companies opposing the pilot program have at least one of their five top institutional investors supporting it, regulatory filings show. These include large investors of Apache Corp. (APA), Halliburton Co. (HAL), Home Depot Inc. (HD), and Mastercard Inc. (MA). Apache submitted a letter to the SEC on June 7 urging it to withdraw the proposal, after four of its five top shareholders had expressed support for the program. Those investors—BlackRock Inc., Davis Selected Advisers, State Street Corp., and Vanguard Group—together own almost 25% of Apache's shares. At Halliburton, its five largest investors, owning roughly 27% of its shares, wrote letters backing the pilot. Home Depot's top three shareholders holding nearly 19% of its shares said they favor the pilot as well.

If Supervalu's Investor Wins, Big Changes Will Likely Follow
" Minneapolis/St. Paul Business Journal (07/11/18) Rehkamp, Patrick"

A proxy fight at Supervalu could determine the future size of the Fortune 500 company. Blackwells Capital, which says it owns roughly 7% of the company, has been urging Supervalu to divest its retail divisions, which includes more than 110 stores and recognizable businesses such as Cub Foods. Last year, Supervalu reported revenue of slightly more than $14 billion, with its retail segments contributing nearly $3 billion. The rest of the company's business is grocery wholesale, which Blackwells says should be its sole focus. If Supervalu spun off the retail segment, it wouldn't be enough to remove the company from Fortune's 500 list, but the company would go from being Minnesota's ninth-largest public company to roughly 13th. Blackwells is also weighing an outright sale of the rest of the company. One of its proposals includes a "sale or merger of Supervalu's strategically attractive wholesale business to or with one of multiple potential competitors," according a website the investor created. "I don't think [Blackwells] been shy in terms of looking at opportunities to unlock value for shareholders," said Blackwells spokesman Dan Gagnier. He said that Blackwells wants to take control of the board because the company has not heeded its advice and some of the current board directors are responsible for Supervalu's financial missteps. One thing to watch for if Blackwells succeeds in scrapping retail at the company's Aug. 16 annual meeting is how it would recommend reinvesting any potential proceeds in the sale back into the company, which would indicate whether it's interested in the company's long-term success.

Shareholders Find Their Voice at Japan's Annual Meetings
" Nikkei Asian Review (07/12/18) Yuda, Masayuki"

At annual shareholder meetings in Japan, both management and investors are slowly embracing dialogue, with both sides exchanging ideas on how best to create long-term value. This year, shareholders filed resolutions at 42 listed companies, a record high and a 68% jump compared with five years earlier. While that is just about 2% of all listed companies ending their fiscal years in March, the steady growth shows that change is happening. Attitudes began changing in Japan after Prime Minister Shinzo Abe introduced two new sets of guidelines, a corporate governance code and a stewardship code. This year's resolutions ranged from appointing outside board members to opposing a large acquisition. Last year, investors were most interested in dismantling companies' takeover defenses and terminating the practice of offering advisory positions to retiring executives. In 2018, they turned their attention to boosting returns. According to Goldman Sachs, proposals to unwind cross-shareholding arrangements between companies more than doubled. There was also a significant increase in demands for higher dividends and share buybacks. "A high approval rate for cross-shareholding-related proposals could be a catalyst for future changes in corporate behavior," said Christopher Vilburn, a Goldman analyst in Japan.

Proxy Voting Is Broken and Needs to Change
" Financial News (07/11/18) Racanelli, Vito J."

Proxy voting professionals and practitioners consider the current proxy system a failed process that is unresponsive to shareholders and increasingly at risk of producing a wrong result in a close vote. They consider a proxy battle last year between Procter & Gamble (PG) and Trian Fund Management just the latest failure: the fight descended to the “snake pit” where printed proxy cards representing most of the roughly two billion votes cast were reviewed for three weeks before the two sides reached a deal. Many are counting on the Securities and Exchange Commission to offer new rules and legal guidance and for participants to push technological solutions. The proxy voting system remains “noisy, imprecise, and disturbingly opaque,” says Edward Rock, a law professor and director of the Institute for Corporate Governance and Finance at New York University School of Law. “In a corporate vote where the margin is close, I am skeptical whether we have a way that we can defend as to who won,” he warns. The unusually high-profile nature of the P&G vote highlighted the inconsistencies of the system. Proxy cards representing millions of votes from each side weren't counted. P&G and Trian said through spokespeople that the proxy voting system seems overly complicated, making an accurate vote counting very difficult in a close election, and that the voting process should be updated to the modern era to meet the needs of shareholders and issuers.

Prepare for Impact: The Rise of Shareholder Activism
" Economia (07/11/18) Videira, Rui"

Rui Videira, an account director at Instinctif Partners, says shareholder activism is on the rise in Europe, with the United Kingdom the country with the most engagement. Companies like Whitbread, Hammerson, Barclays (DTYS), Sky, GKN (GKNLY), and Micro Focus (MFGP) are among those contending activist campaigns or seeing activists build a stake in their businesses. Much of this activism is being driven by Elliott Management, Sherborne Investors, and Cevian Capital, but U.K. firms like The Children's Investment Fund also are helping shape the landscape. "Above all, companies should have a comprehensive understanding of their shareholder base and a tailored engagement plan that shows management and the board are aligned in their commitment to delivering shareholder value," says Videira.

Private Companies May Be a Gateway to Getting More Women on Boards
" Pittsburgh Post-Gazette (07/09/18) Gannon, Joyce"

One way to increase the number of women on public company boards may be through appointments to the boards of private companies.  Because they do not have federal securities reporting requirements, private firms don't have to divulge who sits on their boards or the gender mix of board members. "They tend to fill more seats through their own network of family and friends," observes Kristen Hemmings of Coghill Investment Strategies.  Urging private companies to appoint more female directors makes sense, according to Chuck Cohen, a veteran director on Eat'n Park Hospitality Group's board.  He reasons, "One of the barriers to bringing people on to boards of public companies is that they're not really qualified for board service and have no experience. But how do they get experience if they're not appointed to a board? The answer is experience in a private company environment that has at least some of the characteristics of a public board."

Investors Pose Rare Challenge to UK Directors
" Financial Times (07/08/18) Burgess, Kate"

Investors are challenging institutional shareholders on their longstanding support for directors in the United Kingdom. Shareholder Value Management recently called on investors in Mears, the social housing and homecare provider, to oust Chairman Bob Holt, who has been in charge of the company's board since 1996, when he brought the group to the market. Shareholder Value Management, advising a Frankfurt fund that owns 9% of Mears, said Holt, who controls 10 board positions, has failed "to challenge the status quo despite deteriorating results and a stagnant share price. At Mears' annual meeting in June, just half of the company's shareholders voted for Holt's re-election, with the rest either voting no or abstaining. On Friday, Mears said Holt does not plan to seek re-election again. Mears has scheduled a vote on Shareholder Value Management's proposals, which include an alternative candidate, for August. Meanwhile, Hong Kong's Oasis Management, which holds a 9% stake in Premier Foods, faces more on an obstacle in its battle against Gavin Darby, the company's chief executive. Mears' shareholders already had doubts about Holt, but Premier's board has been rallying key allies in British industry.

Proxy Voting Is Broken and Needs to Change
" Barron's (07/06/18) Racanelli, Vito J."

The vote count in the proxy battle between Procter & Gamble (PG) and Trian Fund Management late last year is the latest failure of the proxy system, according to dozens of proxy voting professionals and practitioners interviewed by Barron's. They say the proxy system is unresponsive to institutional and retail investors, adding that there is greater risk that it will produce an erroneous result in a close vote. The sheer volume of materials, number of intermediaries, and tight windows to meet corporate deadlines lead to frequent miscommunications and untallied votes. In the P&G vote, proxy cards representing millions of votes from each side weren't counted; some were disallowed on technical grounds, and others were ruled out because signatures didn't match or ballots were inadvertently separated from proxies. In many cases, voters weren't informed that their votes weren't counted because such disclosure isn't mandated. Proxy voting professionals and practitioners are looking for the Securities and Exchange Commission to provide new rules and legal guidance and for participants to push technological solutions as activist campaigns become more common. The Depository Trust & Clearing Corp. says it supports any industry effort to improve the proxy voting process. Many governance practitioners are optimistic that blockchain technology might help to set up an "end to end" audit trail so that beneficial shareholders can be certain their votes were cast properly and counted.

Cultural Mix a Hidden Weapon in Nestle CEO's Activist Defense
" Reuters (07/06/18) Geller, Martinne; Herbst-Bayliss, Svea; Koltrowitz, Silke"

Nestle (NSRGY) CEO Mark Schneider's abilities are being tested by Daniel Loeb's Third Point, which is pressuring the company to boost margins and double earnings per share by 2022. According to analysts, Schneider has the experience to balance the measured European shareholder approach and American-style activism, thanks to his dual German-U.S. citizenship, a Harvard MBA, a PhD from the Swiss university of St. Gallen, and 13 years as CEO of a German firm. "Schneider can hopefully bring both of those things to his role," says Kepler Cheuvreux analyst Jon Cox. However, Cox notes that if Schneider fails to deliver on his strategy, Nestle could face calls for a break-up. Among other things, Third Point is calling for Nestle to sell its stake in L'Oreal (LRLCY) and reorganize into three business units. The hedge fund has become one of the company's top 10 shareholders, owning about 1% of Nestle's shares. Meanwhile, Third Point has identified the continuing influence of Chairman Paul Bulcke as a potential problem, indicating that the former CEO "presided over a long period of underperformance, seems too comfortable with the status quo and may be holding up the pace and magnitude of change."

Investors Make Their Voices Heard by Food Brands
" The Food Institute (07/05/18) Rowan, Jennette"

Observers say investors have been active recently in terms of seeking out food companies to sell or restructure their businesses. Dan Loeb's Third Point has sent a letter to Nestle (NSRGY), in which it holds a 1.25% stake, calling on the company to, among other things, break its business into three units—beverage, nutrition, and grocery—each with their own CEO, regional structure, and marketing function. Third Point also reportedly is in talks with Campbell's (CPB) owners and investors about exploring a sale, calling the company undervalued. Meanwhile, Oasis Management has called on Premier Foods to sell its Batchelors Soup brand to improve its financial outlook and create funds for investment.

SEC Chills Shareholder Bids to Pressure Companies on Climate Change
" Politico Pro (07/05/18) Temple-West, Patrick"

The Shareholder Rights Group, which represents investors with at least $25 billion of assets under management, says JPMorgan (JPM), Apple (AAPL), Verizon (VZ), and other major companies have won SEC approval to block stockholder efforts to make eco-friendly changes in their policies. The companies successfully argued that the shareholders were "micromanaging" business operations and could not seek votes on issues ranging from methane gas emissions to financing tar sands deals, the group said. The issues include corporate risk management, financial matters, and environmental, social, and governance (ESG) concerns.  ESG investments are booming, but they are being attacked by pro-business groups. The National Association of Manufacturers is co-funding an effort to raise doubts about the value of such investing. Apple and Verizon used the micromanagement argument to block proposals asking the companies how they could achieve "net-zero" emissions of greenhouse gases. JPMorgan blocked a proposal to evaluate the company's risks associated with its lending to tar sands production and transportation.

Are Institutional Investors Becoming Universal Activists?
" IR Magazine (07/06/18) Schutzmann, Oliver"

Shareholder activism today is a popular and powerful investment strategy, with activists bringing new thinking to corporate strategy and acting as the voice of the shareholder in the boardroom. As shareholder activism grows, there is a more recent trend in the institutional investment world which is making activism far more widespread. This "universal activism" is driven by the rise of ESG investment, the demand for diversity and equality, the appearance of climate risk on companies' risk statements, and the rise of ethical investing. Ethical investing is not new and some sectors have been in the sights of ethical activists for years. But if one lesson can be learned from these battles, it is that the firms that listen, understand, and adapt to shareholder concerns have survived. Those that have tried to fight the advance of the activists have gradually disappeared. For organizations and leaders in the Gulf Cooperation Council (GCC), the arrival of activists on the shareholder register is a given. Companies that acknowledge this fact and take steps to cohabit with the universal activists have a far better outlook than those that ignore the trend.


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