Media Center

3/31/2023

U.K.'s De La Rue Faces Another Call to Oust Chairman

Reuters (03/31/23) Anilkumar, Radhika; Shabong, Yadarisa

Crystal Amber Fund (CRS) is again attempting to remove U.K. banknote printer De La Rue's (DLAR) chairman after failing to do so last year, hoping a shake-up will prop up its performance and share price. Crystal Amber is the company's third-largest shareholder with a roughly 9.8% interest. On Friday it called for a shareholder meeting to oust Chairman Kevin Loosemore and replace him with Pepyn Dinandt, currently an executive at automotive supplier Eberspächer Group. De La Rue said it was weighing the requisition notice's contents and legality. The company has been facing declining profits and less demand for currency, warning in November of "material uncertainty that may cast significant doubt" on its future, including breaching certain debt agreements without key contracts or major cost reductions. De La Rue's shares have seen about a third of their value erode so far this year, after losing nearly half in 2022. "Crystal Amber believes that unless it takes immediate action, De La Rue's audit report for the year to March 2023 is likely to include a material uncertainty going concern qualification," the shareholder stated. The fund added that this would enormously affect the company's ability to tender for new contracts and keep current ones. Crystal Amber urged Loosemore's resignation in October, yet most shareholders voted that he stay on during a meeting in December. De La Rue CFO Rob Harding is scheduled to exit the company later this year to join PayPoint (PAY).

Read the article

3/31/2023

Sachem Head Urges Arconic to Sell Itself

Reuters (03/31/23) Herbst-Bayliss, Svea; Oguh, Chibuike

Sachem Head Capital Management has built a stake in Arconic Corp. (ARNC) and has been urging the U.S. aluminum sheet maker to go through with a process it has launched to sell itself, according to sources. Arconic has been in talks with private equity firms, including Apollo Global Management Inc. (APO), about selling itself, the sources said, at a time when securing debt financing for leveraged buyouts has become difficult following the recent unease in the banking sector. Apollo has so far indicated it is willing to pay $27 to $28 a share for Arconic, one of the sources noted, close to where Arconic's shares currently are trading. Sachem Head's call for a sale would boost the pressure on Arconic to successfully complete the negotiations. Arconic shares have climbed more than 20% since the Wall Street Journal reported on Feb. 28 that the Pittsburgh, Pa.-based company was working with investment banks on a sale process. Arconic currently has a market value of $2.6 billion and had debt as of the end of December of $1.6 billion. Sachem Head, run by Scott Ferguson, established its position in Arconic in the last weeks, the sources said. The position's size could not be ascertained. Ferguson has told Arconic's management that he would like the company to sell itself and would back a sales process, the sources said. Arconic also tried to negotiate a deal in 2019 with Apollo, but nothing materialized. In 2020, it split into two companies: Howmet Aerospace Inc. (HWM), a provider of jet engine components and aerospace fastening systems, and Arconic, a maker of aluminum sheet, plate, and extrusions for the aerospace and construction industries.

Read the article

3/31/2023

Carl Icahn Blasts Illumina for Nearly Doubling CEO's Pay Despite Steep Drop in Market Value

CNBC (03/31/23) Constantino, Annika Kim

Carl Icahn is criticizing Illumina (ILMN) for nearly doubling CEO Francis deSouza's pay from $14.3 million in 2021 to almost $26.8 million last year even as the biotech company's market value fell substantially in the wake of a controversial deal. "I'd find it comical, if it wasn't so reprehensible that ILMN's share price is down 63% due to CEO Francis deSouza making such an absurd and questionable purchase," Icahn, who owns a 1.4% stake in Illumina, told CNBC. "And what is really funny is the idea that it is hard to find good CEOs in this area. I guess it would be hard to find someone who could lose $50 billion of shareholder value in a matter of months yet still get paid 87% more for a grand total of $26.8 million in 2022." Since it closed its acquisition of cancer test developer Grail in August 2021, Illumina's market value has declined from about $75 billion to around $35 billion. The $7.1 billion deal prompted a proxy fight between Icahn and Illumina, with Icahn seeking seats on the company's board and pushing the company to unwind the Grail acquisition, calling it "disastrous" and "a new low in corporate governance." Meanwhile, Illumina has urged shareholders to reject Icahn's three board nominees directors and continued to defend the Grail acquisition.

Read the article

3/31/2023

Korean Fund KCGI Readies Campaign Against DB HiTek

Pulse - Maeil Business News Korea (03/31/2023)

South Korean activist fund KCGI Co. has bought a 7.05% stake in chip foundry company DB HiTek Co., launching a campaign against the firm. The fund said the stake was obtained through Caropy Holdings Ltd. for the purpose of “management influence.” DB HiTek shares passed a limit of 10% to 67,200 won ($51.8) in after-hours trading on Thursday, closing at 61,100 won. KCGI said its conviction that shares were undervalued motivated its investment. “DB HiTek has maintained an outstanding market position in the global foundry market for several years based on its process technology specializing in analog chips,” the fund declared. “The company's corporate value is extremely undervalued given its growth potential and competitiveness based on the solid market position.” KCGI estimated that the price-to-earnings ratio is 3.5 times and the corporate value divided by operating profit before deducting corporate tax, interest, and depreciation is 1.3 times. The fund added that DB HiTek did not talk to shareholders about major decisions such as a spinoff, which put it at odds with minority investors. “The decision should have been made after gaining Majority of Minority approval,” KCGI said. DB HiTek passed a plan to divest its “Fabless” design business and transition to a foundry-dedicated company at the shareholders meeting. KCGI also emphasized that the company's goal of a share buyback worth 100 billion won must include treasury share retirement, demanding safeguards and oversight through an independent board; the fund proposed the launch of concentrated voting to exercise shareholder rights. This invites scrutiny as to whether KCGI's DB HiTek stake will impact DB Group's governance framework. DB Group holding company DB Inc. is DB HiTek's biggest investor, though its position is 12.39%. Its full stake is just 17.78%, even accounting for shares of those in special relationships. Analysts thus point out that a management rights dispute over director appointment, among other things, may come when KCGI partners with minority shareholders. DB HiTek shares have spiked 64% this year alone, and the stock is likely to appreciate further upon escalating rivalry to acquire more shares in the company.

Read the article

3/31/2023

After Amarin's Clash With Sarissa, CEO Mikhail Hits the Exit

Fierce Pharma (03/31/23) Sagonowsky, Eric

Amarin (AMRN) CEO Karim Mikhail has abruptly resigned following a skirmish with investor Sarissa Capital over control of the drugmaker's board. Amarin's filing with the U.S. Securities and Exchange Commission also indicated that Mikhail feels he is entitled to severance pay, which the company disputes and has vowed to fight. Mikhail joined Amarin in July 2020 as Amarin's commercial head in Europe, following a more than 20-year stint at Merck (MRK). Amarin named him president and CEO in August 2021, and his resignation has left the company in difficult straits. Amarin is having to refocus on Europe and other international markets because its Vascepa drug is competing with generics in the United States, and it has also slashed about 90% of its U.S. headcount in recent years. The drugmaker's contest with Sarissa led to the resignation of seven directors, effectively leaving the hedge fund in control. Sarissa claimed Amarin's European Vascepa launch was "behind schedule" and that the company's executive team "weakened the cash coffers." Eventually, shareholders took Sarissa's side in what the investor group called a "huge landslide."

Read the article

3/30/2023

Female Board Directors a Must for Listing, Taiwan's FSC Says

Taipei Times (03/30/23) Shih-ching, Kao

Taiwan's Financial Supervisory Commission (FSC) this week said that companies planning initial public offerings (IPOs) must have at least one woman on their board to increase gender equality among listed firms. A dozen companies planning IPOs on the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEX) would be impacted this year, Securities and Futures Bureau Deputy Director Sam Chang said at a news conference. Six out of 32 firms intending to list on the TWSE and five out of 24 seeking to debut their shares on the TPEX do not have female directors, TWSE president Chien Lih-chung and TPEX chief executive officer Edith Lee said, adding that some companies are making contingency plans to meet the new requirement. The TWSE and TPEX are weighing giving firms time to install female directors before the end of 2023, the commission said. Listed companies scheduled to hold board elections in 2024 also must have at least one female director, Chang said. Currently, 497 listed companies, or 28% of the total, do not have female directors, he noted. Because 163 companies intend to hold board elections next year, they must comply with this new requirement, he said. Starting in 2025, listed firms that do not meet the requirement that one-third of their board must be female will have to explain why and show improvement plans, he said. "Women joining the board has become the international trend, which is crucial to promote diversity and corporate governance," he said. Asia is lagging behind Europe when it comes to female representation on boards, Chang said. Taiwan would be the third nation in Asia making female board members mandatory, after Hong Kong and Malaysia, he said. South Korea requires only companies with assets of more than than 2 trillion won (US$1.5 billion) to appoint one female director, he noted.

Read the article

3/30/2023

Marc Benioff Says He Can Juggle Empathy, Cost Cuts, and Layoffs as He Doubles Down on Efficiency at Salesforce

Fortune (03/30/23) Lev-Ram, Michal

Salesforce (CRM) CEO and cofounder Marc Benioff in recent months has been engaged by activist investors as a result of his costly acquisitions. The enterprise software company laid off roughly 8,000 employees in January, and among those who remained, many complained about the company's false culture. Benioff says, "I'm willing to take the bullets and the cuts and the vilification. That’s what you have to do as CEO, especially through difficult times." In early March, Salesforce released its most recent quarterly results, beating analyst estimates and making better-than-expected projections for its next fiscal year. Revenue in the company's last quarter was up 14% year-over-year while adjusted margins (excluding things like $828 million in restructuring charges) rose to 29.2%, the highest in its 24-year history. Nevertheless, activists continue to pressure Benioff to keep raising profits as well as demonstrate he can set up a feasible succession plan. Benioff has also become a target of some conservative politicians who are anti-ESG. At present, Salesforce's major activist shareholders have not been critical of the company's diversity programs, nor Benioff's goal to plant 1 trillion trees by 2030. However, they have already compelled Salesforce to appoint three new directors to its board, which has the power to vote Benioff out if they are not satisfied with him. On March 27, Salesforce and one of its most vocal activist shareholders, Elliott Investment Management, issued a joint statement, with Elliott asserting it was content with the company's strengthened commitment to "profitable growth," and would halt efforts to nominate its own slate of director nominations. Regarding the impact of activist investors, Benioff noted, "Their primary focus is to make money, and that's what they're doing."

Read the article

3/30/2023

Britain Sets Out Next Steps to Green Its Financial System

Reuters (03/30/23) Jones, Huw

The U.K. finance ministry issued its Green Finance Strategy on March 30 with the aim of becoming the world's first net-zero aligned financial center, proposing measures to stamp out so-called greenwashing in financial markets and channel cash into sustainable projects. The ministry said, "We will ensure market participants have the information and tools they need to align to our climate and nature goals." Regulators want more transparency on ratings to help combat greenwashing, or inflated sustainability credentials. The sector is already developing an ESG Data and Ratings Code of Conduct on best practice. Later this year, Britain will hold a public consultation on a taxonomy—a guide for investors on what constitutes sustainable investments—after the government paused work earlier this year to learn lessons from the European Union's taxonomy. The ministry said, "This will support the quality of standards, labels, and disclosures used in the industry for green finance activity. The government proposes that nuclear—as a key technology within our pathways to reach net zero—will be included within the U.K.'s Green Taxonomy, subject to consultation." PricewaterhouseCoopers said the U.K. government has adopted a voluntary taxonomy at least for the first two years, rowing back on a previous commitment to a mandatory system. PwC UK Sustainability Partner David Croker added, "We'll need to see the details of what is consulted on later this year, but a voluntary approach could result in some U.K. companies aligning to the EU taxonomy, or not complying with the taxonomy at all."

Read the article

3/30/2023

Airbus Pulls up Hard, No Longer Buying 29.9% Stake in Atos-Owned Evidian

The Register (03/30/23) Kunert, Paul

Airbus has exited from talks to purchase nearly a third of Evidian following significant public pressure from TCI Fund Management's Christopher Hohn. Hohn asserted that the proposed transaction would essentially be a bailout of Evidian's parent company, Atos. Airbus said in a note to investors, "After careful consideration, Airbus SE has come to the conclusion that the potential acquisition of a minority stake of 29.9% in Evidian does not meet the company's objectives in the current context and under the current structure." Evidian oversees such segments as cloud operations, high performance computing, digital transformation, and security, and employs 59,000 people. Evidian generated more than $5.12 billion in sales in 2021. Later this year, it will be spun out of Atos to float on the Paris Exchange, under a plan that was conceived of in summer 2022. Airbus said on Feb. 16 it was in discussions to invest in the unit, citing Evidian's security and digital expertise. This appeared to be illogical to TCI Fund Management, which owns a 4% stake in Airbus valued at €4 billion. Hohn urged Airbus management to "immediately terminate negotiations" because investment "would be stranded capital and an extremely inefficient use of shareholder funds." In an open letter, Hohn wrote, "The transaction appears to be a bailout of Atos, a company that is burdened with unsustainable levels of debt and other liabilities." Airbus' decision leaves Atos without the "anchor shareholder" that Atos Chairman Bertrand Meunier was looking forward to. Airbus said it will continue to discuss "other potential options" with Atos and "pursue the work on the long term strategic and technological partnership...which has the potential to create significant value for both companies." The end of negotiations adversely affected Atos' share price, which fell nearly 17%. The partitioning of Atos is on track to proceed, with the other half—referred to by management as the Tech Foundation Company—overseeing datacenter, hosting, digital workplace, unified communications, and business process outsourcing. This entity has 49,000 staff members and generated $5.65 billion in sales in 2021. It is currently downsizing, and was seen as the least appealing part of the organization. Atos will need to find alternative funding to help pay for its costly internal transformation.

Read the article