9/3/2025

Activist Investor Pushing to Sell Comerica, Will Seek Board Seats

Wall Street Journal (09/03/25) Heeb, Gina; Glickman, Ben

An activist investor plans to launch a board fight at Comerica (CMA), intensifying pressure on the Texas-based regional bank to sell itself. The campaign signals the growing impatience among investors for a long-awaited wave of consolidation among regional lenders, which are under pressure to merge in order to better compete with behemoths like JPMorgan Chase and Bank of America. Hedge fund HoldCo Asset Management has argued that Comerica should explore a sale after years of underperformance. If Comerica doesn’t pursue a sale, HoldCo expects to nominate around five directors to the company’s 11-person board when the window opens, likely in December, according to people familiar with the matter. The investor’s plans are fluid and could change. HoldCo, which invests in banks, in July revealed a 1.8% stake in Comerica now worth roughly $160 million. Comerica has more than 350 branches throughout Texas, California, Michigan, Arizona and Florida and its market value is around $9 billion. A spokesperson for Comerica said the company welcomes feedback from shareholders and is continually looking at opportunities to create value. HoldCo said Comerica has mismanaged its interest rate exposure and cost structure and would be better off as part of a bigger bank. It is approaching a key regulatory threshold of $100 billion in assets, which comes with steep compliance costs. Other top Comerica shareholders including Citadel and North Reef Capital Management have signaled similar concerns, people familiar with the matter said. Separately, the bank has continued to struggle to deal with a botched technology upgrade in recent years, according to a person familiar with the matter. Comerica shares have underperformed a broader index of bank peers in recent years, falling by nearly 30% over the last seven years when the broader index is up. Chief Executive Curtis Farmer took over in April 2019. Outspoken Wells Fargo (WFC) analyst Mike Mayo has also publicly renewed his own pressure on Comerica. Around a decade ago, he led a push for Comerica to explore a sale. His team at Wells Fargo last week estimated a takeover price of $90 a share, a 25% to 30% premium. “If you asked me a decade ago whether we’d be in the same situation, then I’d probably throw my hands up and say that’s crazy,” Mayo said. “It’s unbelievable.” Shareholder activists typically shy away from highly regulated industries like banks, but the push by HoldCo could pave the way for more campaigns at lenders. A flurry of regulatory changes under the Trump administration has many dealmakers and bank executives optimistic that mergers might finally pick up. So far, activity has been somewhat muted, partially due to turbulent markets and uncertainty from Trump’s tariff policies. But some midsize banks have started to make moves. Pinnacle Financial Partners (PNFP) and Synovus Financial (SNV) in July announced an all-stock merger valued at $8.6 billion. The two companies and Comerica all rank within the 50 largest U.S. banks.

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9/2/2025

Korea Zinc Chairman Accused of Using Activist Platform to Pressure Young Poong

Korea Times (09/02/25) Ji-Hye, Jun

Young Poong said Tuesday that Korea Zinc (010130) Chairman Choi Yun-beom had joined forces with shareholder activist platform ACT to prepare an offensive against it amid a long-standing dispute over management rights of the world's largest zinc smelter. Young Poong has been aligned with private equity firm MBK Partners in the dispute against Choi since last year. The Young Poong–MBK alliance is currently the largest shareholder of the smelter. According to Young Poong, ACT's internal report from September 2024 used the phrase “attack on Y (Young Poong)” and outlined tactics such as reviewing the shareholder registry, filing injunctions and appointing temporary shareholder representatives. The plan predates the Young Poong–MBK alliance's tender offer on Sept. 13, 2024, which aimed to become the smelting firm's largest shareholder. “This undermines Choi's claim of being a hostile M&A (merger and acquisition) victim,” a Young Poong official said. ACT also amended part of its contract with Korea Zinc to include Young Poong Precision (now called KZ Precision), a company affiliated with Choi, apparently to exert influence over the management rights dispute. A February 2025 ACT document noted that securing a Young Poong Precision-backed director was the “top priority,” although the candidate later lost in the vote at the regular shareholders' meeting held in March. Young Poong has raised several legal issues regarding the case. It argued that ACT, which claimed to represent minority shareholders, acted unethically by leveraging its influence over shareholder votes to intervene in the management dispute in exchange for financial compensation. In particular, evidence that Korea Zinc's management contracted with ACT to pursue strategies aimed at checking Young Poong could constitute breaches of fiduciary duty, as the contract and advisory fees were unrelated to Korea Zinc's core business. Additionally, ACT and Young Poong Precision could face potential violations of the Capital Markets Act. The ACT document from February showed that Young Poong Precision had asked ACT to engage with shareholders on matters such as cumulative voting and stock dividends, which could be considered solicitation of proxy voting. However, they may have breached legal requirements by failing to provide proxy forms and supporting documents. Young Poong Precision also did not list ACT as a related party in the proxy solicitation documents, raising concerns of incomplete disclosure. As these matters involve important information related to proxy voting, they could result in corrective orders, suspension or prohibition of solicitation by financial authorities and, in some cases, criminal penalties. “Any actions by specific parties that interfere with the company's regular business operations can negatively affect both shareholders and employees,” a Young Poong official said. “We will take appropriate measures in line with legal and regulatory standards.”

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9/2/2025

Elliott Pushes for PepsiCo Turnaround with $4 Billion Stake

Wall Street Journal (09/02/25) Cooper, Laura; Thomas, Lauren

Elliott Investment Management has built a roughly $4 billion stake in PepsiCo (PEP) and is pushing the beverage and snacks giant to refranchise its bottling business and make other changes to boost its sagging share price.  PepsiCo has been struggling to win back soda drinkers after ceding market share to rivals. Its food business, once an engine of growth for the company, is also under pressure. The challenges have weighed on PepsiCo’s shares. The company’s market value has shrunk to about $200 billion, a roughly 25% drop from a peak of $270 billion in May 2023. Elliott’s position, one of the activist’s largest equity stakes ever, makes it one of PepsiCo’s biggest investors. PepsiCo was once a formidable rival to Coca-Cola (KO), but its namesake classic soda recently dropped to fourth place by U.S. sales volume. Coke is No. 1, and Dr Pepper, owned by Keurig Dr Pepper (KDP), is No. 2, according to Beverage Digest data. Sprite, also owned by Coca-Cola, is No. 3. PepsiCo’s problems have only intensified in recent months, thanks to tariffs and increasingly price-sensitive consumers. In addition to its namesake cola, PepsiCo brands include Mountain Dew, Gatorade, Lay’s, Doritos and Quaker Oats. It recently acquired the probiotic soda brand Poppi and tortilla-chip maker Siete Foods. Elliott delivered a letter to PepsiCo’s board of directors Tuesday with ideas it believes could boost the company’s shares by at least 50%. It suggested PepsiCo consider refranchising its bottling network, leaving ownership in the hands of local and independent bottlers. Rival Coca-Cola completed a large-scale refranchising initiative in 2017. The Fanta and Powerade owner now has a market value of nearly $300 billion, with its share price near all-time highs. Elliott also encouraged PepsiCo to review both its beverage and food offerings and eliminate those that don’t sell well. The firm also said PepsiCo should provide investors with more specific plans to improve its results. Some of PepsiCo’s independent beverage distributors — many of them family businesses that have bottled Pepsi for generations — said they have never seen a worse time for the brand, The Wall Street Journal reported in April. Many said they felt that PepsiCo had given priority to investments in its food unit at the expense of its beverage unit. Some industry-watchers have argued PepsiCo’s beverage business, which accounted for roughly 40% of its revenue in 2024, would fare better as a stand-alone company. The food business accounts for the rest of its revenue. Nelson Peltz’s Trian Fund Management unsuccessfully pushed PepsiCo to merge with food maker Mondelez (MDLZ) and spin out its beverage business roughly a decade ago. Sales growth in PepsiCo’s key North America food business has slowed every quarter since peaking in late 2022, Wells Fargo analyst Chris Carey wrote in June. He also said at the time the company needs a “major rethink” of the unit’s cost structure, with the potential for almost $800 million in savings. Pepsi Chief Executive Ramon Laguarta, who has been at the helm since October 2018, has said he is focused on finding ways to offer consumers more value. Other efforts include improving product placement in retail stores. The company has rolled out new marketing campaigns for its sodas and focused on more closely integrating its drink and snack businesses. For example, it has aimed to cut costs by avoiding delivery of Pepsi drinks and Lay’s chips to the same store in separate trucks. It also has plans to relaunch some of its mainstay snack brands such as Lay’s and Tostitos without artificial ingredients. PepsiCo’s shares rose slightly following its most recent quarterly results in July after the company noted improvements in organic sales volume and market share trends for its North America food business. The company also reported market share growth in its North America beverage business, with gains due in part to the strength of Pepsi Zero Sugar. Elliott, with over $76 billion under management, is known as one of the busiest activist investors and has made recent big bets in other household names. The firm took a more than $5 billion stake in Honeywell late last year and called for the conglomerate to break itself up before it announced plans to do so. Elliott later got a seat on Honeywell’s board, too. The activist also took a big stake in Starbucks (SBUX) last year and played a role in the coffee giant replacing its chief executive. Starbucks was similarly up against slumping sales and evolving consumer preferences.

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9/2/2025

Elliott Investment Management Wants PepsiCo to Emulate Coke’s Playbook. This is Why.

MarketWatch (09/02/25) Rogers, James

Elliott Investment Management wants PepsiCo Inc. (PEP) to emulate rival Coca-Cola Co.(KO) by refranchising its “operationally intensive” bottling network as part of a broader effort to reaccelerate growth and boost the company’s financial performance. In the statement, Elliott said that PepsiCo’s recent performance has been marked by a series of strategic and operational challenges. “These have led to poor financial results, sharp stock-price underperformance and a highly dislocated valuation,” Elliott added. PepsiCo’s stock rose 2% in midday trading, paring earlier intraday gains of as much as 6.2%. It has slipped 0.3% in 2025, while Coca-Cola shares have rallied 10.4% and the S&P 500 index has gained 8.4%. PepsiCo’s underperformance has been much more pronounced over the past two years, with the stock dropping 13.5% over that time while Coca-Cola shares have advanced 15.9%. In the letter, Jesse Cohn, managing partner at Elliott, and Marc Steinberg, partner, urged the company to consider refranchising PepsiCo Beverages North America’s bottling network. “PepsiCo should evaluate the potential refranchising of PBNA operationally intensive bottling network — as its closest peer has and as PepsiCo itself has done in years past — to allow each business to focus on its core competencies,” they wrote. “PepsiCo should also conduct a review of its brand and [stock-keeping unit] portfolio with the goal of reducing operational complexity and creating a more focused PBNA.” The proposed move to refranchise PepsiCo’s bottling attracted attention on social media. Writing on X, Jim Osman, founder of the Edge Group, which provides analysis of activist ideas, noted that when Coke refranchised its bottling in 2017, margins soared. In the presentation, Elliott wrote that “since acquiring its bottlers in 2009/2010 in pursuit of strategic flexibility, PBNA has profoundly underperformed” both the Coca-Cola system and Keurig Dr Pepper Inc. (KDP) on growth as well as margins. Elliott said that the current structure of PBNA “has failed to deliver for many years and its shortcomings are more evident than ever, as PepsiCo has not responded to a changing landscape.” Elliott also urged PepsiCo to “right-size” the cost base for Pepsi Foods North America “for the current demand environment,” as well as to streamline the portfolio. Elliott’s latest disclosure of its equity holdings showed that it did not own any PepsiCo shares as of June 30. In a statement sent to MarketWatch, PepsiCo said that it maintains an active and productive dialogue with its shareholders and “values constructive input” on delivering long-term shareholder value. “We note Elliott Investment Management’s disclosure of its presentation and will review its perspectives within the context of our strategy to drive sustainable growth,” the company said. PepsiCo said its current strategy includes investments in innovation, portfolio transformation and international growth. “We are confident that the successful execution of these initiatives positions PepsiCo to accelerate growth, strengthen our competitive advantage, and deliver meaningful, long-term value for our shareholders,” the company said.

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8/30/2025

Elliott Sees Opportunities to Create Value at Warehouse REIT Rexford Industrial

CNBC (08/30/25) Squire, Kenneth

Rexford Industrial Realty (REXR), a self-administered and self-managed full-service real estate investment trust (REIT), has a stock market value of $9.47 billion ($40.01 per share). On Aug. 27, Elliott Investment Management announced that it has taken a position in Rexford. The industrial REIT space has benefited from strong secular tailwinds, as the rise of e-commerce, which requires more warehouse space on average than a traditional retail business, has driven up warehousing needs over time. Moreover, Southern California, which Rexford focuses on, is a particularly attractive location due to entitlement challenges, land scarcity, proximity to ports and its dense urban population, all of which have fueled demand and fast rent growth. Historically, this prime and irreplaceable portfolio has commanded a top of the market valuation, trading at a 20-30% premium to net asset value (NAV) and an 8-turn premium to peers on an adjusted funds from operations (AFFO) basis. However, as we have seen many times before with many activists, REITs are inherently poorly governed and attract management teams with misaligned interests, according to Kenneth Squire, founder and president of 13D Monitor. Rexford is no different. Despite being a California-based company, they are domiciled in Maryland, a state that is infamous for management friendly regulations, including the Maryland Unsolicited Takeovers Act, which allows the company to classify its board without shareholder approval. "A California REIT incorporating in Maryland is not for convenience reasons, but more for entrenchment purposes," Squire notes. "It is this type of company that would also have a seven-person board with a majority (including two co-CEOs) being members for over 10 years and owning approximately 1% of outstanding common stock as a group, almost all of which was granted to them. Once setup like this, the REIT playbook is generally to take on debt, issue shares and buy as much property as you can because management’s upside is tied more to the level of assets managed than stock price." So, since its IPO in 2013, the company has increased its share count by over 9x, increased debt from $193 million to $3.5 billion and grew assets from $555 million to $12.6 billion. This strategy worked for a while when Rexford traded at a large premium to the underlying value of its real estate, but it finally caught up to them as sales, general and administrative expenses bloated, corporate governance eroded and executive compensation became loaded. (Two CEOs at $13 million each). As its premium to NAV started to decline, so did this strategy and Rexford now trades at a 20% discount to NAV and a 5-6 turn AFFO discount to peers with its stock price down to $40 per share (prior to Elliott’s announcement) from a high of more than $80 in December 2021. "Luckily for shareholders, the time for change has come," says Squire, as Elliott Investment Management has disclosed a top five position in Rexford. While this implies a minimum of 5% economic exposure (approximately $400 million to 500 million), given Elliott’s investment history, their exposure is likely at least $1 billion of their $76 billion of assets. Elliott has a rich history of driving change at companies like Rexford, so Squire expects it to advocate for better corporate governance, better capital allocation, and restoring the company’s strategic focus on creating shareholder value. While it is important to note that activism can be more challenging in Maryland, it has not acted as a prohibition, especially for experienced and committed activists like Elliott, Squire points out. "In fact, the tools available to the company that would ordinarily discourage activism are in this situation more of poison chalice. Any attempt by management to entrench themselves in the face of an activist would only further damage their reputation and support Elliott’s case that change is warranted. So, we would expect Elliott to fare well in a proxy fight here if it came to that. But we do not think it will come to that." When an activist engages with a company, it often puts that company in pseudo-play, getting the attention of strategic investors and private equity. This dynamic is even greater for a company like Rexford that has long been the subject of takeover speculation. For Rexford, its premium assets, the consolidation in the REIT industry, and its present discounted valuation makes the company a natural acquisition candidate. Moreover, Elliott also has a robust history of catalyzing strategic outcomes at REITs. "Given Rexford’s current 20% discount to NAV, we believe that any takeout would occur at least at NAV, but more likely at a premium given the company’s historical valuation and portfolio quality," concludes Squire. "If such an opportunity were to materialize, as a fiduciary to its investors and Rexford shareholders, Elliott would weigh the value from an acquisition against the long-term standalone plan and advocate for whichever path would deliver the best value for shareholders. Considering the long-term plan would likely require the time and uncertainty of a board and management reconstitution, we would think that an acquisition at a reasonable premium would be the preferred path here."

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8/29/2025

TCI-Backed Hedge Fund Parvus Curbs UK Ties Amid Tax Turmoil

Bloomberg (08/29/25) Tetley, Liza; Stupples, Benjamin

Activist hedge fund Parvus Asset Management has taken steps to distance itself from the UK, moving investment management activities to the low-tax territory of Jersey. Parvus Asset Management registered a company last September in the British crown dependency with an office located in St. Helier, according to a registry filing. Earlier this year, one of the firm’s main UK entities terminated its authorization with Britain’s financial watchdog and transferred its investment management activity to the new Channel Islands outpost that Parvus’s founder, Edoardo Mercadante, owns, other filings show. Meanwhile, Italian-born Mercadante has purchased a sprawling country estate for £8.5 million ($11.5 million) on the territory between southern England and northern France, according to recent property listings. Mercadante has also this year stepped down as a director of at least two Parvus entities in the UK, after holding those roles for more than a decade, filings show. Mercadante still lists his residency as the UK in a remaining role linked to the firm, in which Chris Hohn’s The Children’s Investment Fund has a minority stake. Mercadante is making changes at an unsettling time for many of the UK’s richest. Chancellor of the Exchequer Rachel Reeves is expected to increase taxes in a number of areas this year in an attempt to meet key budget goals. The government has already imposed tougher tax rules on wealthy residents originally hailing from abroad, known as “non-doms.” The previous system allowed non-doms to avoid UK taxes on overseas earnings for as long as 15 years. The new rules offer a shorter timeframe for tax breaks and also expose residents to UK inheritance duties on overseas assets. It’s unclear whether Mercadante is affected by these changes, which have pushed numerous financiers to move abroad over the past year. Jersey residents, by contrast, don't face any capital gains or inheritance tax, while the territory also offers special corporate tax rates to fund managers. As a result, Jersey is a popular place to domicile a hedge fund. Brevan Howard Asset Management, Man Group Plc, Taula Capital Management and Michael Hintze's Deltroit Asset Management are among a number of hedge fund firms that are based, or have an outpost, in the Channel Islands territory. Mercadante, a former fund manager at Merrill Lynch Investment Management, founded Parvus in 2004. Several Parvus-linked entities remain registered in the same Mayfair office building as Hohn's hedge fund firm.

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