2/13/2025

Riot Platforms Appoints New Directors to Board with Inputs from Starboard, D.E. Shaw

Reuters (02/13/25) Ghosh, Kanjyik; Dey, Mrinmay

Bitcoin miner Riot Platforms (RIOT) said on Wednesday it has appointed three new directors to its board after inputs from investors Starboard Value and D.E. Shaw. The move comes after Reuters reported in January that D.E. Shaw, best known for employing quantitative investment tools to power returns, had built a position in the firm and might push for changes. Last year, Starboard Value also took an undisclosed position in the company. Starboard had pushed Riot to consider allotting some of its power capacity to artificial intelligence. D.E. Shaw declined to comment, while activist investor Starboard Value did not respond to a Reuters' request for comment. Riot said the newly appointed members - Jaime Leverton, Doug Mouton and Michael Turner - are experienced with overseeing the conversion of bitcoin mining assets for potential AI or high-performance computing (HPC) uses. Riot, which processes bitcoin transactions and receives the cryptocurrency as payment, also said it has engaged Evercore and Northland Capital to evaluate potential AI/high-performance computing uses for remaining power capacity at its Corsicana, Texas, facility to maximize their value. Riot, which is worth about $3.8 billion, last year sought to acquire rival miner Bitfarms (BITF). The two companies did not agree to a sale, but agreed on changes to Bitfarms' board. Hopes have been high in the crypto industry that it will benefit from President Donald Trump's administration, which has sent encouraging signals that regulations might be relaxed.

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2/13/2025

Elliot Reportedly Amasses £3.8 Billion Stake in BP

Guardian (UK) (02/13/25) Ambrose, Jillian

The activist hedge fund engaging BP Plc (BP) has amassed a stake in the oil company worth almost £3.8 billion, or 5% of its shares, to become its third biggest shareholder. Elliott Management is widely expected to use its grip on the 120-year-old company to demand sweeping changes, including a potential break-up of the company, after BP lost almost a quarter of its market value in the past two years. Sources close to Elliott have reportedly warned that BP will be pushed to abandon its commitment to green energy by limiting its spending on renewables and selling off some of its low-carbon investments. The fund is also expected to insist on a boardroom cull to oust BP’s leadership, including the chair, Helge Lund, alongside a reset of the company’s strategy. The hedge fund emerged as a threat to BP’s leadership over the weekend when it was reported that it had taken an undisclosed stake in the company. BP’s chief executive, Murray Auchincloss, was forced to use the company’s full-year results on Tuesday to defend it against the threat of a radical overhaul by promising a “fundamental reset” of its strategy. Auchincloss said BP had already “laid the foundations for growth” in 2024 by “reshaping its energy portfolio” and promised to “fundamentally reset our strategy and drive further improvements in performance” at an investor day on Feb. 26. “It will be a new direction for BP, and not business as usual. I am excited about it and look forward to updating the market and seeing many of you then,” he said. Under its former boss Bernard Looney, BP set a path in 2020 to become a net zero energy company by 2050, which included some of the greenest spending plans of any major oil company and won the approval of climate campaigners including Greenpeace. However, the company has backtracked from its green ambitions as surging global oil and gas market prices made fossil fuel production increasingly profitable, and handed an advantage to rivals including Shell (SHEL) and ExxonMobil (XOM), which plan to grow their production despite climate warnings.

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2/13/2025

Elliott Pushes Big Cost Cuts at BP to Preserve Its Independence

Bloomberg (02/13/25) Gopinath, Swetha

Elliott Investment Management is demanding BP Plc (BP) make drastic cost cuts and divestments to strengthen its future as a standalone company, people with knowledge of the matter said. The activist investor has asked BP to slash expenses in a range of areas to bring them more in line with peers, the people said. It’s built up a nearly 5% interest in BP, according to the people, which would be worth around £3.7 billion ($4.6 billion) at BP’s current share price and make it one of Elliott’s biggest-ever bets globally. Elliott wants BP to reshape its business to be more like other oil majors such as Shell Plc by cutting spending in areas such as renewable energy, as well as making sizable non-core asset divestments, according to the people. It’s pushing BP to refocus its capital allocation priorities so it can boost shareholder returns through buybacks and dividends, the people said. The activist currently sees more value in overhauling BP’s operations and maintaining its independence, rather than selling out to a competitor at a small premium, the people said. Since a shift toward renewable energy under BP’s previous leadership, the company’s valuation has lagged its peers. Several of those rivals have been running the numbers over what a takeover of BP might look like, an indicator of how far the London-based behemoth has fallen, Bloomberg News has reported. BP has recently held some initial discussions with Elliott, according to the people, who asked not to be identified because the information is private. Elliott sees the upcoming Feb. 26 capital markets day — where Chief Executive Officer Murray Auchincloss is expected to unveil a new strategy — as a key test of management’s credibility, the people said. Auchincloss recently told BP staff that 5% of employees would be laid off to cut costs. That would still leave BP with more than 80,000 workers. Rival Chevron Corp. on Wednesday said it plans to lay off as much as 20% of workers in a cost-cutting push. Chevron employed 46,500 people at the end of 2023 and has a market value that is roughly triple the size of BP. BP has announced plans to spin off its offshore wind unit — the most capital-intensive renewable assets in the portfolio. It’s also looking for a partner for its solar and battery storage arm, Lightsource BP, after acquiring the remaining stake in it from its founders in the autumn, a person with knowledge of the matter said. Elliott’s efforts to accelerate a revamp come the same week Auchincloss said a “fundamental reset” is coming to the London-based firm. It was Auchincloss’s strongest language yet publicly that change is coming, but investors and analysts are wondering whether it will be enough. Bloomberg News first revealed Feb. 8 that Elliott had built a stake in BP. Even after some gains this week, BP’s stock is still down about 18% from a recent peak in February 2023, placing it among the worst performers in the Stoxx Europe 600 Oil & Gas Index, which has declined roughly 1% over the same period. Elliott began building its stake last year, the people said. Its campaign is being run by John Pike, an equity partner who focuses on areas including energy, as well as London-based portfolio manager Gaurav Toshniwal, the people said. Pike has previously led campaigns at Phillips 66 (PSX), Hess Corp. (HES), and Marathon Petroleum Corp. (MPC). The Financial Times reported the size of Elliott’s stake and some of their demands earlier Thursday, citing unidentified people.

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2/13/2025

KKR Is Said to Weigh Nissan Investment After Honda Talks End

Bloomberg (02/13/25) Philip, Siddharth Vikram; Baigorri, Manuel

KKR & Co. (KKR) is considering investing in Nissan Motor Co. (NSANY), people familiar with the matter said, after the struggling Japanese automaker’s talks to combine with rival Honda Motor Co. (HMC) failed. The U.S.-based private equity firm is in the early stages of evaluating an equity or debt investment to improve Nissan’s financial position, the people said, asking not to be identified because the deliberations are private. On Thursday, Honda and Nissan formally ended negotiations to combine into what would’ve been one of the world’s biggest carmakers. The two, along with Mitsubishi Motors Corp. (MMTOF), will still continue their strategic partnership and collaborate on in-house development of batteries, autonomous driving, software, and electric vehicle technology. Nissan has been casting around for a new partner as talks with Honda wobbled, people familiar with the matter said previously, and is looking for an ally ideally from the technology sector and US-based. Walking away from the tie-up with Honda is a huge gamble for Nissan, which has an outdated product lineup that’s forced it to discount heavily, destroying its bottom line. KKR has long had a presence in Japan, which accounts for about 39% of its Asia Pacific portfolio, according to an investor presentation last year. Its traditional private equity investments in Japan have generated a gross internal rate of return of about 40%. The firm has recorded a gross 2.2 times multiple on invested capital across 12 investments in the country since 2010, according to the presentation. Japan now ranks as the country where it’s deploying the most capital outside the U.S. KKR teamed up with local buyout fund Japan Industrial Partners Inc. on an acquisition of Hitachi Ltd.’s chip equipment arm that was completed in 2018. It relisted the company, now known as Kokusai Electric Corp. (KOKSF), in 2023 in what ranked as the biggest Japanese initial public offering in years. The PE firm has a number of ongoing potential transactions in the country, where staid corporations now are being shaken up by a wave of interest from foreign capital and activist investors. KKR earlier this month raised its offer for Japanese software company Fuji Soft Inc. (9749) to fend off a rival bid from Bain Capital. It’s considering a stake in a proposal by Seven & i Holdings Co.’s (SVNDY)founding family to take the Japanese convenience store operator private.

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2/12/2025

Farallon Capital Management Takes Aim at One of Japan’s Biggest Pharma Groups

Financial Times (02/12/25) Keohane, David; Lewis, Leo; Dempsey, Harry

Farallon Capital Management has taken a significant stake in one of Japan’s biggest pharmaceutical companies as activist shareholders, emboldened by a corporate governance reform drive, take aim at the country’s household names. The San Francisco-based fund with $39 billion in assets has built a more than 3% position in Astellas (ALPMY), according to people familiar with the matter, making Farallon a top-three shareholder, based on LSEG data. The move is part of a wave of shareholder activism in Japan as governance reforms by the Tokyo exchange push companies to take investor demands more seriously. Astellas shares, which were down 2% in early afternoon trading on Wednesday, gained sharply on the news to trade up 3.5%. Farallon made its name in the country with a series of high-profile bets, including a long and often contentious engagement with Toshiba (TOSYY), where it successfully installed an outside director shortly before the cash-strapped conglomerate was taken private. Its involvement in the management change, alongside fellow activist Elliott Management, redefined the role of shareholders in Japanese corporate crises. Since exiting its roughly $800 million position in Toshiba in 2023, Farallon has left the market speculating about its next engagement. Farallon is hoping to work with the Astellas management and board to quickly and significantly increase its share price, said people familiar with the matter. The company has a market capitalization of ¥2.6 trillion ($17 billion) after its share price fell almost 40% from a peak in 2023. The fund has been engaging with Astellas since 2020 and sent its board numerous letters. Farallon wants Astellas to cut costs more quickly and overhaul its research and development programs, which it says are diffuse and have failed to advance a sufficient number of drugs past trial stages. It also wants Astellas to refocus its merger and acquisition strategy on later-stage drugs with a higher chance of getting to market. Astellas had spent more than ¥1.5 trillion on M&As since the beginning of 2016, according to Farallon's letters, and the company said last year that under new chief executive Naoki Okamura, it was the “right time to go on the aggressive to further accelerate growth.” One of its most successful drugs, Xtandi, which treats prostate cancer, is expected to reach the end of its patent exclusivity period in 2027, giving the company a limited window to invest cash flow from the drug's sales. Astellas during its third-quarter results last week said it was making progress in cost-cutting and drug development. It has targeted a 30% core operating margin, compared with its current level of close to 20%.

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2/12/2025

SoftBank Suffers Surprise Loss in Final Quarter

The Times (London) (02/12/25) Powell, Emma

The Japanese conglomerate that is preparing to finance one of the world’s largest bets on artificial intelligence suffered a surprise loss during its latest quarter. SoftBank (SFTBY) reported a loss of 369.2 billion yen ($2.4 billion) in the three months to the end of December, down from a profit of 950 billion yen a year earlier. The consensus forecast for the latest quarter had been for a net profit of 234 billion yen, according to London Stock Exchange Group estimates. The result was largely attributable to investment losses at the Vision Funds, its technology-heavy investment vehicles, and foreign exchange impacts as the dollar strengthened against the yen, according to Yoshimitsu Goto, SoftBank’s finance chief. The Vision Funds accumulated 352 billion yen ($2.3 billion) in losses, led by declines for some of its highest-profile investments, including Coupang (CPNG), dubbed “South Korea’s Amazon,” and Didi, a Chinese rival to Uber. SoftBank and Masayoshi Son, its founder, are gearing up to back Stargate, an American AI infrastructure project that is a joint venture with OpenAI, Oracle (ORCL), and MGX, the technology investment arm of the United Arab Emirates government. Up to $500 billion in funding has been pledged over four years, with $100 billion immediately available, its backers have said. Goto said “external funding” would be used alongside Stargate’s equity on a “project-by-project basis.” SoftBank pledged to invest $100 billion in the U.S. after Trump’s election victory in November, although it is not clear if Stargate is part of those plans. The Tokyo-based company is also set to contribute between $15 billion and $25 billion to OpenAI, leading a wider funding round that is expected to raise about $40 billion as the company behind ChatGPT seeks to develop and commercialise its large language model. SoftBank had already invested $2 billion in the company in January and Goti said these were “strategic milestones in our broader AI road map.” The company has completed almost 210 billion yen in share buybacks as part of a program to repurchase 500 billion yen in stock. SoftBank has become one of the biggest names in the tech industry, with investments in companies ranging from the Cambridge-based Arm (ARM) and ByteDance, the Chinese owner of TikTok, to Flipkart, the Indian ecommerce giant. SoftBank’s previous investment track record has been patchy, with some bets — including its backing for WeWork, which filed for bankruptcy last November — proving duds. However, the share price has benefited as investors have piled back into tech businesses in recent years, with SoftBank stock reaching a record high as recently as July. The stock had endured a tumultuous 12 months after being hit badly by the tech rout that gripped markets last summer, over fears around the health of the American economy. This delivered a double blow to the Japanese conglomerate by not only hitting SoftBank shares but also the value of the listed tech companies it has backed. It also emerged in June that the hedge fund Elliott Management had built a stake in SoftBank, pushing it to increase share buybacks. The shares closed 360 yen, or 3.8%, higher in Tokyo on Wednesday at 9,856 yen.

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2/12/2025

Korea Zinc Secures 95% Support from Institutional Investors for Proposals

Chosun Biz (South Korea) (02/12/25) Nam-hee, Kim

At the extraordinary general meeting of Korea Zinc (010130) held on Jan. 23, over 95% of domestic and foreign institutional investors appeared to support most of the proposals for amendments to the articles of association suggested by the current management led by Chairman Choi Yoon-bum. According to Korea Zinc, more than 95% of institutional investors, excluding friendly shareholders from Chairman Choi's side and Young Poong (000670) and MBK Partners, voted in favor of 5 out of 6 proposed amendments to the articles of association at last month’s extraordinary general meeting, including setting a cap on the number of directors (19), stock split, appointing the chairperson of the board outside directors, changing the dividend record date, and introducing quarterly dividends. The support rate among institutional investors for the amendment to introduce cumulative voting also exceeded 70%. Amending the articles of association requires a higher quorum for special resolutions than for ordinary resolutions, requiring at least two-thirds of the voting rights of attending shareholders and more than one-third of the total issued shares to be in favor. Korea Zinc noted, "The amendment to the articles of association passed smoothly due to overwhelming support from domestic and foreign institutional investors holding the casting votes, including the National Pension Service and overseas institutions." On the 5th of this month, Korea Zinc appointed Hwang Deok-nam, an outside director, as the chair of the board of directors. This is the first time an outside director has assumed the position of chair at Korea Zinc. Former chair Choi will continue to participate in the board of directors as an inside director. Korea Zinc explained, "Chairman Choi has resigned from his representative director position as of March last year at the end of his term and has also stepped down from the chair position to enhance the independence and oversight function of the board and to improve governance."

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2/12/2025

Japan Eyes Measures to Empower Firms with Details of De Facto Shareholders

Japan Times (02/12/25)

Japan is considering introducing a system that enables publicly traded and other stock companies to identify de facto shareholders who do not appear in shareholder lists but who effectively exercise voting rights. The system will be included in a draft revision to the companies law being discussed by the Legislative Council, which advises the justice minister. Specifically, the council is likely to approve the idea of giving companies the right to demand that the shareholders through whom de facto holders exercise their influence disclose information on them. The system is aimed at promoting dialogue between corporations and shareholders at a time when activist investors within and outside Japan exert increasing sway over listed companies. De facto shareholders, known as beneficial shareholders, do not appear in shareholder lists compiled by companies but effectively hold shares in companies through trust banks and exercise voting rights. The lists display only the names of trust banks and other nominal shareholders, making it difficult for companies to identify their de facto owners. Although shareholders are required to submit a large-volume shareholding report if they own more than 5% of the shares of a listed company, it is difficult for companies to identify those who hold less than 5%, leading to the risk that many shares could be bought without their knowledge. The Financial Services Agency is also considering measures to help companies identify de facto shareholders, such as a revision of its action guidelines for institutional investors to urge them to provide explanations on such holders to companies upon request. But it is unclear how effective that would be, as it would not be a legal requirement. The Legislative Council is expected to discuss a plan to enable companies to request information from trust banks and other shareholders on their shareholder lists. There is also a plan to ensure the system's effectiveness by imposing an administrative fine or restricting voting rights if they do not meet disclosure requests. A system to identify beneficial shareholders "would not work well unless there is a legal obligation," said Yuichi Ikeda, senior executive managing director at Daiwa Institute of Research. "I hope this will be an opportunity to promote dialogue, including by allowing companies to give explanations to shareholders who exercise their de facto voting rights."

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