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4/3/2020

Rolls-Royce Shareholder ValueAct Cuts Stake to 4.5%

Reuters (04/03/20) Sandle, Paul

ValueAct Capital Management has reduced its stake in U.K. aero-engineer Rolls-Royce (RLLCF) from 9.48% to 4.5%, according to a statement issued to the stock market today. Shares in Rolls-Royce have fallen more than 50% in the last five weeks as the coronavirus pandemic delivered a staggering blow to the company's airline customers, which have had to ground fleets and furlough personnel. Shares were trading down 4.2% at 266.8 pence at 9:22 GMT.

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4/3/2020

Lone Star Succeeds in $1.9 Billion Buyout of Japanese Hotel Chain Unizo

Reuters (04/03/20) Fujita, Junko

U.S. buyout fund Lone Star has successfully acquired a majority stake in Japanese hotelier Unizo Holdings Co. Ltd. Unizo said that Lone Star, together with a group of Unizo employees, secured 86.6% of outstanding shares in an open bid that started in December. The deal ends a nine-month bidding war among global investors such as Blackstone Group (BX) and SoftBank-backed Fortress Investment Group. The battle was seen by some as a test case for Japan's efforts to attract foreign investors through improved corporate governance. As it entertained offers from bidders, Unizo requested that a group of employees have the right to control the new owner's ability to sell assets. This unusual approach raised governance questions about the company's management. Lone Star emerged as a white knight in December with a plan that allowed a group of Unizo employees to own 73% of common shares, with the rest going to Lone Star. Lone Star would provide 178 billion yen in financing for the buyout, giving it the right to own the company.

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4/3/2020

GCP Applied Technologies Adds Two New Independent Directors in Fight With Starboard

Reuters (04/03/20) Herbst-Bayliss, Svea

On April 3, GCP Applied Technologies (GCP) announced that it will add two new independent directors to its board and expand the size of the board by one to 10 members. The move comes after Starboard Value, which owns 9% of the company, said it will move forward with its proxy fight and nominated eight directors. GCP named Armand Lauzon, most recently president and CEO of C&D Technologies, and John McPherson, most recently chief financial and strategy officer at Vulcan Materials Co. (VMC), as director candidates. GCP said, "We have been regularly refreshing our board to ensure our directors are diverse and have the appropriate skill sets and experience for our business." In addition to nominating the two new directors, the company said it will re-nominate eight current board members, including Clay Kiefaber, a Starboard representative who joined the board last year. However, it will not re-nominate Marran Ogilvie, who also joined the board last year after the settlement with Starboard. Both Ogilvie and Kiefaber are on Starboard's director slate, which also includes Starboard partner and head of research Peter Feld. Investors will vote on the director candidates at GCP's annual meeting on May 28.

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4/3/2020

Investor Boosts Stake in Broadcaster Tegna

Deadline (04/03/20) Goldsmith, Jill

Investment group Standard General said April 3 it increased its stake in Tegna (TGNA) to 12%. "We are fully committed to Tegna, and we are not going anywhere," said Soo Kim, Standard General's founding partner. "This increase in our position underscores our conviction that the company's intrinsic value is much higher than its market price, but also our belief that Tegna will not achieve its full potential without an upgraded Board." Standard General has suggested an alternate slate of four board members in opposition to the company's nominees. "Our additional investment boosts our economic and financial exposure to the company's equity and signals our steadfast commitment to driving change at Tegna for the benefit of all shareholders," the investment group stated. It has criticized Tegna's leadership and voiced concern that it wasn't engaging with some potential bidders. Tegna said last week that of four interested suitors, two withdrew offers and the other two had not signed confidentiality agreements that were needed to move negotiations forward or indicate where they would obtain the financing.

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4/2/2020

Synalloy Commits to Review of Strategic Alternatives After Market and Global Health Pandemic Stabilization

Business Wire (04/02/20)

The board of Synalloy (SYNL) has committed to conducting a strategic review once there is stabilization from the current market volatility and macroeconomic disruption related to the Covid-19 pandemic. The review will consider a sale of all or part of Synalloy, board composition, governance enhancements, balance sheet and business optimization, and management succession if a liquidity event does not occur. The company argues that the ongoing campaign by Privet and UPG to overhaul Synalloy's management is "ill-timed and unproductive," and that it would destabilize the company and jeopardize shareholder value. Synalloy says its board recently offered a settlement that would give Privet and UPG the right to designate two of eight board directors, with two incumbent directors resigning, among other compromises. The board says it has not heard back from UPG or Privet on this offer.

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4/2/2020

Asset Value Investors Builds Stake in SoftBank

Bloomberg (04/02/20) Taniguchi, Takako; Lee, Min Jeong

Asset Value Investors Ltd., a U.K. money manager known for engaging smaller Japanese firms, has invested $46.6 million in Masayoshi Son's SoftBank Group. SoftBank has lost more than half its value since mid-February even as Son decided to fund shareholder returns and pay down debt. "[SoftBank] trades at a massive discount to the value of its assets," said AVI CEO Joe Bauernfreund in an interview. "And on top of that, the planned asset disposal and buyback will be massively accretive to the net asset value." SoftBank is too big for AVI to make shareholder proposals at annual general meetings, but AVI still wrote to SoftBank pressing it to sell down some of its portfolio, buy back shares, and improve its corporate governance. SoftBank currently trades at about a 70% discount to its net asset value, according to Bauernfreund.

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4/2/2020

Tegna: Standard General’s Stock Sales Are ‘Troubling’

Broadcasting & Cable (04/02/20) Lafayette, Jon

On April 1, Standard General LP sold 5 million shares of Tegna (TGNA) in a series of swaps. Standard General owns a 9% stake in Tegna, and still might be able to vote those shares because the swaps were made after the deadline for eligibility. Standard General has accused Tegna of allowing the company to underperform against competitors and allowed potential bids for the company to disappear. The investment group has also proposed four people with broadcast experience that it wants elected to Tegna's board. Tegna says it rejected those nominees due to conflicting positions with other broadcasters. Tegna also called Standard General's sale of 5 million shares "troubling for all Tegna shareholders."

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4/2/2020

Bill Ackman Explains Himself as Pershing Square's Portfolio Soars

Institutional Investor (04/02/20) Celarier, Michelle

Bill Ackman's Pershing Square Holdings is up 3.3% for the year after rising 11.1% in March. Ackman was quick to respond to the coronavirus crisis, hedging his portfolio and sending his employees home for the duration on Feb. 27. As a result, Ackman has made $2.6 billion off one $27 million investment that protected his portfolio of hotels and restaurants as the markets tumbled. He was in the process of closing out hedges when, on March 18, he tweeted to President Donald Trump to shut down the country for a month to stop the virus from spreading. Despite his dire warnings, Ackman said he was buying stocks that day and continued to buy until March 25, by which point Pershing Square had redeployed all of the net proceeds from its hedges by adding to investments in a number of companies. In a recent letter to investors, Ackman explained that his hedges were credit default swaps on various investment grade and high yield credit default swap indices. "At the time of purchase, the IG or investment grade indices were trading near all-time tight levels of about 50 basis points per annum. The high yield index, the CDX HY, was also trading near its lowest spread ever," he explained. The firm eventually sold the hedges because "the risk-reward ratio of holding the contracts at 140 basis points was not nearly as compelling as when spreads were at 50 basis points." Ackman denies the allegations that he intentionally scared people about Covid-19 to increase his profits, saying that his firm merely bought what are essentially insurance policies to mitigate the risk to investors' capital.

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4/2/2020

Ackman's Hedge Fund Posts 11% Gain in March After Recovery Bet

Bloomberg (04/02/20) Parmar, Hema

Bill Ackman's Pershing Square Capital Management jumped 11.1% in March after making a $2.5 billion "recovery bet" on the U.S. economy. Pershing Square is up 3.3% for the year. In contrast, the S&P 500 Index fell 12.5% in March and is down more than 20% so far this year. Ackman said in a recent Bloomberg Television interview that he has boosted his wagers in portfolio companies like Lowe's Cos. (LOW), Hilton Worldwide Holdings Inc. (PK), and Warren Buffett's Berkshire Hathaway Inc. (BRK.A). "That's about the most bullish thing we've done," he said. "We are all long. No shorts, you know, betting on the country." Ackman's publicly traded hedge fund posted its best year on record in 2019, when it soared 58% following four consecutive years of losses.

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