Italy's Network Plan Turns up Heat on Telecom Italia CEO: Sources
" Reuters (11/12/18) Flak, Agnieszka; Jewkes, Stephen"
Italy is prepping legislation that could result in a merger of Telecom Italia's (TIM) network with smaller competitor Open Fiber, an issue that is causing friction between the company's CEO and some board directors, according to a source. Open Fiber has been rolling out a fiber optic network across Italy, in direct competition with TIM. Industry observers say such duplication makes little economic sense. Another source said the legislation could be an amendment to a draft law approved in September that still needs parliament's approval. If that bill gets sidetracked, it could be part of another law, the source said. TIM, whose leading shareholder is French media group Vivendi, has already started a process to put its network assets into a separate company, NetCo, which would be completely controlled by TIM. TIM CEO Amos Genish has not ruled out selling a stake in NetCo at some point, but wants TIM to retain control. In June, Genish said he was eager to talk about combining TIM's fiber-to-the-home broadband assets with those of Open Fiber, but not the entire infrastructure. The network matter was front and center earlier this year when Elliott took a stake in TIM to call for for a governance overhaul and restructuring, including a spin-off and partial sale of NetCo. Since Elliott's involvement, Genish has been caught in the middle of the struggle between Vivendi and Elliott, which eventually wrested board control away from the French group at a shareholder meeting in May. Genish hopes to finalize a three-year plan launched in March to overhaul TIM and shore up its finances, but he has come under pressure due to more robust competition at home and a large financial outlay to secure airwaves in Italy's fifth-generation mobile auction. TIM's shares have fallen almost 30% this year, and some Elliott-appointed directors are now advocating Genish's resignation because he opposes TIM losing control of its infrastructure, according to sources.
Blue Harbour Discloses New Stake in Jack in the Box
" Bloomberg (11/09/18) Deveau, Scott"
Blue Harbour Group disclosed a new stake in restaurant chain Jack in the Box Inc. (JACK) and may push for changes at the company. The investor owns a 6.8% stake in the fast-food company and believes it is undervalued, according to a regulatory filing. Blue Harbour has concluded Jack in the Box made the right decision to sell Qdoba Restaurant Corp. and divest a majority of its remaining company-owned units. Jack in the Box is now in a position to reap the benefits of a more focused corporate entity with improved profitability, according to Blue Harbour. The firm has held talks with management and other parties, and may continue to seek discussions on topics including capital structure, board composition, and strategic alternatives, the filing shows. "As Jack in the Box executes its plan, our lens will be steady on the company’s progress toward unlocking and delivering value we see in it," said Blue Harbour managing director Robb LeMasters in a statement. Jack in the Box reached an agreement last month with Jana Partners, the fund run by Barry Rosenstein, which will see two new directors appointed to the board.
Barclays Investor Bramson Lobbying Non-Executive Directors
" Bloomberg (11/09/18) Spezzati, Stefania"
Despite a blowout quarter for Barclays Plc's (BCS) investment bank, a source says Sherborne Investors' Edward Bramson is stepping up a campaign to shrink the British lender's trading business by garnering support from its non-executive directors. Bramson reportedly has been courting fellow shareholders in California, New York, and London in recent weeks, and has told some that he could boost his stake in the lender. The source notes that Bramson's current investment of more than 5% allows him to call a general meeting of shareholders, but this is not the preferred route. According to the source, Bramson has reiterated that he does not want Barclays to pour more capital into its corporate and investment bank, which is its lowest-return business. Barclays' stock has fallen more than 20% since CEO Jes Staley assumed control in December 2015. Bramson is expected to meet Nigel Higgins, who was appointed to succeed John McFarlane as chairman and is seen as a likely supporter of Staley, in the next few weeks, the source said.
P&G Moves to Streamline Its Structure
" Wall Street Journal (11/08/18) Al-Muslim, Aisha"
Procter & Gamble Co. (PG) on Thursday announced plans to revamp its management structure, shrinking the number of business units from 10 to a half-dozen and giving the heads of those products control over regional sales teams and some functions previously overseen by headquarters. The new organization, which is part of an effort by the conglomerate to streamline its operations, will take effect July 1, 2019. Each of the six business units' CEOs will report to P&G Chief Executive David Taylor. The CEOs of the business units are the same that are currently overseeing those product categories. Four unit presidents will now report to these unit CEOs, and the roles of two of the sales presidents will be diminished. Each unit CEO will be responsible for direct sales, as well as product innovation and supply chains for the 10 biggest geographic markets. P&G's decision to streamline its structure comes after investor Nelson Peltz joined the company's board of directors near the end of this year's first quarter after a prolonged proxy battle. Peltz had previously petitioned for a simplified structure, saying it would improve agility, accountability, and responsiveness to local needs.
Morningstar Slams Hidden Backers Behind Anti-ESG Campaign
" Portfolio Adviser (11/07/18) Tasman-Jones, Jessica"
The Main Street Investors Coalition wants to give more prominence to board recommendations and management proposals, according to Morningstar. Jackie Cook, a director of Morningstar, expressed concern about the financial backers of the lobbying group. In an interview, Cook noted that the Main Street Investors Coalition says it represents retail investors, but it has many corporate backers, including the National Association of Manufacturers and related business lobbying groups like the U.S. Chamber of Commerce and the Center for Capital Markets Competitiveness. The lobbying groups have been attacking shareholder voting rights since institutional investors started significantly increasing support for climate resolutions around 2014, said Cook. Now, the lobbying groups appear to have influenced the agenda of the Securities and Exchange Commission's roundtable set for Nov. 15 that will focus on the voting process, retail investor participation, and proxy advisory firms. Cook raised concerns about a potential impact on issues such as thresholds for filing and re-submission as well as the role of proxy advisory firms. Proxy adviser Institutional Shareholder Services has expressed similar concerns about the Main Street Investors Coalition and its financial backers.
This Holiday Season Could Seal Barnes & Noble's Fate as the Bookseller Considers Selling Itself
" CNBC (11/08/18) Thomas, Lauren"
After six years of declining sales, Barnes & Noble (BKS) is considering a sale of its business after reportedly receiving interest from founder and Executive Chairman Leonard Riggio, the company's biggest shareholder with a 19.2% stake, and U.K. retailer W.H. Smith, among other parties. Riggio said the company is feeling "highly anxious" and somewhat "paranoid" this holiday season, as it must prove it can deliver sales growth in its core book business. "We've done a lot of things this year to try to put ourselves on the right track and to get our comp-store sales number to head in the positive direction," he said. Among other things, the company is rolling out a new ad campaign in movie theaters and on cable television and testing 10 to 15 store layouts during the holidays. Investors have seen Barnes & Noble's setbacks as opportunities. Sandell Asset Management attempted to take the bookseller private in July 2017, when it held a stake of about 2.75% in the company. It eventually proposed a deal valuing it at around $650 million, or $9 a share, but Riggio said he didn't think the deal was "bona fide." Further, Schottenfeld, which holds a nearly 7% stake, called on the board to explore strategic options, which is underway.
Amid Increasing Demand for ESG Disclosure, Voting Support for Shareholder Resolutions on Environmental and Social Issues Is Rising
" PRNewswire (11/08/18)"
According to a study by The Conference Board and the Rutgers Center for Corporate Law and Governance, voting support on proposals regarding companies' sustainability practices has risen during the last few years, but these proposals are rarely approved. The study, "Proxy Voting Analytics (2015-2018)" conducted in collaboration with FactSet and IRGS Analytics, looks at more than 2,500 annual general meetings (AGMs) at Russell 3000 corporations in the Jan. 1 and June 30 period. The study found that proposals related to social and environmental policies received the support of an average 25.7% of votes cast at AGMs. "This finding indicates that shareholders of U.S. public companies continue to believe that the board of directors and senior management are better suited to determine the business viability of certain sustainability activities, and that one-size-fits-all policies may lead to inefficiencies or capital misallocations," said study author Matteo Tonello, managing director of corporate leadership at The Conference Board. "However, our study also unveils a number of trends suggesting that the demand for additional disclosure in this area will continue to grow in the coming years."
Bill Ackman’s Pershing Square Sells $56 Million in Chipotle Stock
" Barron's (11/07/18) Lin, Ed"
Bill Ackman’s Pershing Square Capital Management revealed Wednesday it has sold part of its holding in Chipotle Mexican Grill (CMG) for $55.8 million. According to a filing to the Securities and Exchange Commission, affiliated entities sold a total of 118,307 shares of the restaurant chain for roughly $472.05 each on average on Monday and Tuesday. The disclosure said the sales were “related to portfolio management.” Specifically, Pershing Square LP, Pershing Square II LP, and Pershing Square International Ltd., a Cayman Islands exempted company, sold Chipotle shares. Overall, Pershing Square now owns 1,940,799 Chipotle shares. The latest sale follows a larger one in late August. The stock has had a fantastic performance in a year of market volatility. Chipotle is up 65% so far in 2018.
Ericsson Nudges Up 2020 Sales Target as Recovery Gains Pace
" Reuters (11/08/18) Soderpalm, Helena; Swahnberg, Olof"
Ericsson on Thursday upped its sales target for 2020, driven largely by a recovery in its embattled networks business as demand for next-generation 5G mobile equipment increases. Ericsson stuck with its target for operating margins to rise above 10% in 2020, excluding restructuring, but said its longer term goal of boosting operating margins to greater than 12% would occur no later than 2022. However, the fresh financial goals failed to impress the market as several analysts had expected an upgrade, following the Swedish firm’s tentative 2018 recovery after years of crisis. Cevian Capital, with an 8% stake at the end of last year, said the adjustment was conservative and it sees further potential in Ericsson compared to the fresh targets given on Thursday. “But the higher level of ambition is a step in the right direction for Ericsson,” it added.
New Jersey Lender Explores Sale as Banks Consolidate
" Wall Street Journal (11/06/18) Lombardo, Cara; Ensign, Rachel Louise"
Investors Bancorp (ISBC) is in the early stages of exploring a sale, and shareholders could possibly propel a deal. Blue Harbour Group, which has a 9.7% stake in the bank, is its largest shareholder. The regional bank and Blue Harbour reached an agreement last year that allowed the fund's managing director, Peter Carlin, to join its board. Scopia Capital Management and Elliott Management also have been shareholders in the bank. Investors Bank has hired deal adviser Keefe, Bruyette & Woods, and could start reaching out to potential buyers soon, according to sources. A sale could come as consolidation continues among smaller lenders across the United States. Investors Bank shares have fallen sharply amid bank stocks' broader decline, but the lender had a market value of about $3.3 billion on Tuesday morning.
Xilinx Working With Barclays to Acquire Mellanox, Deal Could Be Announced in December, Sources Say
" CNBC (11/07/18) Sherman, Alex"
Sources say Xilinx (XLNX) has hired Barclays (BCS) to advise on a bid to acquire Mellanox (MLNX) after approaching the chipmaker with an offer. They note that a transaction, if one happens, would be announced in December. The acquisition would give Xilinx a broader array of products to sell into the data center market. Earlier this year, Mellanox reached a settlement with Starboard Value that placed three new directors on its board. In late October, it was reported that Mellanox had hired a financial adviser to seek a sale after receiving takeover interest, with Piper Jaffray analysts naming Xilinx, Intel (INTC), and Broadcom (AVGO) as potential buyers.