Media Center

10/14/2019

Amber Capital Locks Horns With Lagardere Over Lawsuit

Reuters (10/14/19) Kar-Gupta, Sudip; White, Sarah

On Oct. 14, Amber Capital called the lawsuit it is facing from Lagardere baseless and said it would continue to seek strategy and management changes at the French publishing company. Lagardere said on Oct. 11 that it was suing the minority shareholder and seeking 84 million euros ($93 million) in damages, accusing Amber of leading a "destabilizing campaign" and using smear tactics in the press that hurt its share price. The move comes as French lawmakers have issued proposals, such as more transparent disclosure requirements, that could feed into plans by the government to rein in activist funds. Amber, which has a stake of about 5.3% in Lagardere, said, "Lagardere is hoping to intimidate Amber with this new claim, which is as aggressive as it is baseless. The reality of the company's situation will not change until the managing partners decide to reconsider its strategy and governance."

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10/13/2019

Aecom Nears $2.4 Billion Deal to Sell Management Services Unit

Bloomberg (10/13/19) Deveau, Scott; Tan, Gillian

Sources say Aecom (ACM) is close to a $2.4 billion deal to sell its management services business to a consortium of private equity firms, including Lindsay Goldberg and American Securities. In June, the engineering and design company announced plans to spin off its management services unit—a move criticized by Jeff Smith's Starboard Value, which argued that the plan did not go far enough and called for the company to explore an outright sale. Starboard added that there was room for operational improvements in its design and consulting services business as well.

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10/13/2019

Elliott and Blackstone Enter Hostile Territory in Japan

Bloomberg (10/13/19) Ren, Shuli

Developer and hotel operator Unizo Holdings Co. is currently fighting off a hostile takeover bid that could shake up the Japanese market. Unizo, which has much of its office rental business in Tokyo, has seen its stock soar 128% since July, when it received an unsolicited tender offer from leading travel agency HIS Co. This was followed by a rival bid from SoftBank Group Corp. (SFTBY)-owned Fortress Investment Group, which was itself followed by a higher offer from private-equity giant Blackstone Group Inc. (BX). Though initially supportive of the Fortress offer, Unizo's board of directors has since demanded terms whereby a new owner will be unable to restructure or dissolve Unizo without the consent of employees. Employees would also determine whether the fund will exit and how it will do so—possibly through buybacks, strategic sales, or re-listing. Elliott Management, which has built a 13% stake in the company since August, has voiced its disappointment with these terms, which are unlikely to work for Blackstone or Fortress. If both deals fall through, Elliott will carry a significant loss and may not be able to call an extraordinary general meeting until January. The Fortress offer will expire Thursday. Foreigners who want control of Unizo may be fighting an uphill battle, because the company has shown a willingness to dilute its shareholders many times over to maintain its independence. Unizo is heavily indebted, and the stock trades at 1.4 times book value, but because Japanese developers do not account for valuation changes in their properties, the company's actual net asset value is more than twice its book value. This makes it an attractive deal for private equity, but only if Unizo allows the funds to divest assets and pay off debt.

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10/12/2019

UTC, Raytheon Investors Block Merger

Journal Inquirer (10/12/19) Vasile, Zachary F.

On Oct. 11, investors in United Technologies Corp. (UTX) and Raytheon (RTN) voted to approve the companies' proposed merger, paving the way for the creation of a massive aerospace and defense enterprise. The companies said that shareholders backed the merger by an "overwhelming" margin. UTC is officially the surviving entity of that merger, and its investors will own 57% of the new firm, but it will move its headquarters to where Raytheon is based. The merger, which will close in the first half of 2020, had drawn criticism from investors Dan Loeb of Third Point Management and Bill Ackman of Pershing Square, who owned 0.75% and 0.67% of UTC, respectively.

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10/11/2019

Box Tries to Escape the Curse of the Silicon Valley Midcap

Bloomberg Businessweek (10/11/19) Grant, Nico

Midcap cloud-computing company Box Inc. (BOX) has struggled with slowing growth and intensifying competition, compounding investor concerns that the aging company has yet to turn a profit. Box shares are down more than a quarter since its 2015 initial public offering, and its growth and revenue both lag behind file-sharing rival Dropbox Inc. (DBX). Shareholder advisory firms Glass Lewis and ISS have both raised concerns about the structure of its board. In September, investor Starborad Value LP disclosed a 7.5% stake in Box, saying the shares were undervalued and that it would seek changes including asset sales, business combinations, and a board refresh. Box hopes to avoid a hostile engagement with Starboard, and early talks between the two have been collaborative in tone. Executives are confident about their current strategy for the company, acknowledging that some of their evidence for this is based on internal developments that investors may not see. Nonetheless, Starboard's involvement has led the company to reconsider parts of its strategy, looking for more ways to cut costs.

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10/11/2019

Australia Makes Big Strides in Closing Gender Gap, Global Survey Finds

Sydney Morning Herald (Australia) (10/11/19) Chung, Laura

A new report from the Credit Suisse Research Institute has found that companies in Australia and New Zealand recorded the biggest improvement in women senior managers over three years. Australia and New Zealand topped the list of 56 countries, showing the greatest improvement in the "momentum" category for female participation in senior management. Across the three years, Australia and New Zealand improved by 7.9%, and the total percentage of women on boards in those countries jumped from 19.5% in 2015 to 29.6% in 2019. While Australia and New Zealand topped the momentum category, other countries, including France, Norway, Italy, and Vietnam, recorded higher total percentages of women on boards. The report concluded that "the impact of greater diversity in the boardroom leads to a better gender balance in executive functions." Gender, work, and employment relations professor Rae Cooper from the University of Sydney Business School cautioned that while the progress should be celebrated, there are always steps that can be taken to improve gender diversity in corporate offices.

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10/11/2019

Citigroup Names New Global Co-Heads of Equity Capital Markets

Financial Times (10/11/19) Morris, Stephen; Noonan, Laura

Citigroup (C) has appointed Douglas Adams and James Fleming as its new global co-heads of equity capital markets (ECM), the unit that assists companies in raising money on public stock exchanges. The move comes as ECM fees have dropped 16% industry-wide this year, according to data from Refinitiv. Citi has been under pressure from ValueAct, which has a $2 billion stake in the bank, to increase its strategic focus.

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10/11/2019

Elliott Ranks as Busiest Hedge Fund in Third Quarter, Again

Reuters (10/11/19) Herbst-Bayliss, Svea

According to data released by Lazard on Oct. 11, Paul Singer's Elliott Management outspent its rival hedge funds in the third quarter with campaigns at AT&T (T) and Marathon Petroleum Corp. (MPC). During the quarter, Elliott committed $5.2 billion in new capital, making it the busiest activist both by capital committed and number of campaigns launched. So far this year, Elliott has committed $8.4 billion in 14 campaigns, compared with Carl Icahn's Icahn Associates, which has committed $2.6 billion in three campaigns; Daniel Loeb's Third Point, which has committed $2.4 billion in three campaigns; and Starboard Value, which has committed $2.3 billion in 11 campaigns. Overall, activists deployed $11 billion in capital in the third quarter, up from $8.7 billion during the same period last year. A record 20 campaigns were launched in Europe, according to Lazard, which noted that close to half of all campaigns in 2019 made demands for mergers and acquisitions.

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10/11/2019

Uniper Remains Independent for Now Despite Fortum Push: CEO

Reuters (10/11/19) Kaeckenhoff, Tom; Steitz, Christoph

In an internal memo, Uniper CEO Andreas Schierenbeck told staff that he will seek clarity on several issues as its biggest shareholder, Fortum (FOJCY), plans to increase its stake. Schierenbeck wrote, "We...need to acknowledge that Fortum with its current or possible future share in Uniper is not only a major shareholder, but also a competitor. Overall, Uniper is an independent company and will continue to operate as such." Fortum recently agreed to acquire a more than 20.5% stake in Uniper from Elliott and Knight Vinke for 2.3 billion euros ($2.5 billion), which would boost its stake to more than 70.5%. The deal is subject to regulatory approval in Russia, where regulators have capped Fortum's ownership in Uniper at 49.99% due to a strategic water license operated by Uniper's local subsidiary Unipro. According to Schierenbeck, "My ultimate goal for the coming discussions therefore is to request further details around the plans from Fortum." Uniper opposes a full takeover by Fortum due to concerns about job cuts and a breakup.

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