1/21/2022

Unilever Bid Fiasco Ramps Up Pressure on Managers to Deliver Plan B

Financial Times (01/21/22) Evans, Judith; Agnew, Harriet; Kuchler, Hannah

Unilever Plc (UL) Chief Executive Alan Jope's efforts to acquire GlaxoSmithKline (GSK) and Pfizer’s (PFE) consumer health division have failed. Unilever management has expressed confusion, skepticism, and straight-out opposition to the attempts, according to several shareholders. Unilever’s share price fell as much as 11% before the company announced it would not be making a fresh offer. The reaction to the bid has plunged the FTSE 100 consumer goods group into its biggest crisis since it fought off a hostile approach by Kraft Heinz (KHC) five years ago, calling into question Jope’s management and blowing open a debate on how Unilever can boost its sluggish performance. “Unilever surely needs to address the fact that five years later the share price is only at the level of that (Kraft Heinz) bid,” said Terry Smith, a top-15 shareholder, in a letter to investors on Thursday. “Why then should we trust this management and board with preserving value for shareholders?” The GSK acquisition was intended to accelerate sales growth by applying Unilever’s marketing and distribution machine to health brands, but instead it prompted an outcry. Investors took fright at the scale of the potential deal, which could have pushed up Unilever’s debt to 4.5 or five times earnings. But not all were opposed to its general direction, said Bruno Monteyne, an analyst at Bernstein. Bert Flossbach, founder and chief investment officer at Flossbach von Storch, an €80 billion asset manager that is among Unilever’s top 10 shareholders, said: “Jope is in a tough position because Unilever has been a lame duck for a long time. But if there is nothing to buy at a reasonable price, then don’t buy anything.” The GSK bid has further shaken confidence in the ability of the chief executive and his chief financial officer, Graeme Pitkethly, to deliver change. “They’ve shown their hand: they clearly don’t have confidence in the existing business, otherwise they wouldn’t have been contemplating this,” said an investor who asked not to be named. Smith and others have also criticized Unilever’s focus on its sustainability credentials. Unilever indicated this week that it would be open to other large consumer health deals. But analysts and rating agencies played down the prospect of an acquisition or merger on the scale of the GSK division after poor outcomes from other recent large consumer deals.

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1/21/2022

Sabre Exec Joining Board of India's Yatra in Win for Investor Maguire

Skift.com (01/21/22) Parsons, Matthew

Yatra's (YTRA) appointment of Sabre's (SABR) Chief Commercial Officer Roshan Mendis as an independent board member should satisfy Australian investment firm Maguire Investment Trust, which has been pushing to operationally revamp the Indian corporate travel agency. Yatra also entered into a cooperation pact with Maguire, which owns 7.4% of the company, where it will "abide by certain customary standstill and voting provisions for a period of 18 months from the date of signing of the agreement." In a July 21 open letter, Maguire said Yatra had "an extremely shareholder-unfriendly corporate governance profile and a lack of transparency in its executive compensation packages." The firm stated reservations about the company's corporate governance and executive compensation practices. "We have already suggested one extremely capable candidate who the board failed to even offer an interview, let alone legitimately consider appointing to the board," Timothy Maguire wrote. "We believe a change in tone at the top is essential and the board should immediately solicit shareholder recommendations for highly qualified director candidates to be named as nominees for election at an annual general meeting of shareholders scheduled for 2021." Maguire additionally said he wanted to drive Yatra's stock price on the Nasdaq exchange to at least $6 per share in 2022, and realize $100 million in sales. It is presently trading at $1.84. Mendis will replace Sean Aggarwal, who has left the board "due to other pressing commitments." Yatra further stated that "his retirement is not the result of any disagreement with the company or any of its affiliates on any matter relating to the company's operations, policies, or practices." ProKonsul Consulting President Gaurav Sundaram said Mendis' appointment signals a resolution of a potential clash with Maguire. "The failed Ebix [EBIX] acquisition has dented confidence, and for Yatra to succeed in the post-Covid world it will need additional management resources that can leverage the complexities and opportunities of the e-commerce and business travel domains," he said. "Such additions will allow Yatra to quickly increment growth and cross-selling synergies inherent in its business model." Yatra is also planning to take the company public in India in the first half of this year, and use the proceeds to buy up other local companies and fortify its balance sheet. Yatra racked up a $1.9 million loss for its 2022 second quarter, and is refocusing on the cargo sector, seeking to churn out $4 million to $5 million in freight-forwarding revenue this year. Taiwan's Fuh Hwa Securities Investment Trust Co., Ltd. has obtained a 4% interest in Yatra, according to a Jan. 14 SEC filing. "I look forward to working with Roshan and the other directors on our board, as we continue advancing our multi-channel strategy and deliver results for shareholders," said Yatra CEO Dhruv Shringi. "Amidst ongoing industry disruption and evolving consumer trends, we believe we are poised to capitalize on the accelerated shift by consumers to booking travel online and well positioned to deliver on growth and profitability post the pandemic."

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1/20/2022

Netflix to Eliminate Supermajority Requirement for Board Changes Following Investor Demand

CNBC (01/20/22) Elias, Jennifer

Netflix (NFLX) said in its fourth-quarter earnings report that it will propose the removal of a supermajority provision that has required 66% of the votes for board member changes. "While our current governance structure has served our shareholders extraordinarily well with a sustained period of substantial growth, we've clearly proven our business model," the company said. "So the Netflix Board has decided to evolve to a more standard large-cap governance structure and will recommend several changes at our next annual meeting." Netflix added that it will permit shareholders to call special meetings and amend the voting standard for its directors in uncontested elections. Stockholders have been demanding the change to a simple majority for years. Five times since 2013, they have backed a proposal at the annual meeting to eliminate the supermajority requirement. In its proxy filing ahead of the last shareholder meeting in June, Netflix stated: "We believe that in the current dynamic business environment, the supermajority we have in place is appropriate to increase stability in our operations, while still being set low enough for stockholders to have a voice on issues where there is strong consensus. We will continue to monitor and evaluate this issue." The new notice was posted on the same day Netflix reported fourth-quarter earnings and revenue that topped estimates, although shares plummeted almost 20% in after-hours trading on decelerating subscriber growth.

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