6/30/2025

Elliott’s Banca CF+ Launches Takeover Bid for Banca Sistema

Bloomberg (06/30/25) Sirletti, Sonia; Vanuzzo, Antonio

Banca CF+, an Italian financial services firm controlled by Elliott Management Corp., is seeking to buy Banca Sistema SpA (BSTA), according to a statement on Monday. The firm is offering a combination of cash and shares worth €1.80 ($2.11) for each Banca Sistema share, a discount of around 8% compared to Banca Sistema’s Friday close. The offer currently values the bank at around €145 million, according to Bloomberg calculations. The deal represents the latest in a series of potential M&A transactions that have turned the Italian financial services sector into a hotbed of activity in recent months. Bloomberg reported on Sunday that Banca CF+ was planning to make a bid for Banca Sistema. Banca Sistema shares fell as much as 8.6% in Milan trading on Monday. The offer includes €1.382 in cash and €0.42 through the allocation of 21 shares of Banca Sistema unit Kruso Kapital SpA (KK), subject to a split of Kruso Kapital’s shares on the basis of a 1:98 ratio for each share tendered. Banca Sistema focuses on financing and managing trade receivables owed by Italian local governments, mainly through factoring and credit management services. It also offers salary and pension backed loans, as well as pawnbroking. Shareholders Gianluca Garbi, SGBS S.r.l. and Garbifin S.r.l. agreed on June 29 to tender a 24.86% stake to Banca CF+ in the offer, the same statement said. “Banca CF+ will benefit from the full financial support of funds advised by Elliott Investment Management LP as major shareholder, to support growth and development plans resulting from the completion of the offer,” it said in the statement. UniCredit is acting as financial adviser to Banca Sistema, while law firm Chiomenti as legal adviser. CF+, controlled by Elliott investment management’s funds, specializes in financing solutions for companies and offers factoring services, tax-credit purchases and short- and medium-term financing.

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6/30/2025

U.S. Supreme Court to Decide on Controlling-Investor Challenges

Bloomberg (06/30/25) Feeley, Jef; Stohr, Greg

The U.S. Supreme Court will consider whether activist investors can use an 85-year-old law to challenge corporate moves bolstering controlling shareholders, in a case being closely watched by some of Wall Street’s biggest investment funds. In a setback to hedge fund manager Boaz Weinstein, the court agreed to review a decision allowing a lawsuit against closed-end fund provider FS Credit Opportunities Corp. (FSCO) and others, including BlackRock Inc., (BLK) the world’s largest asset manager. The case comes to the justices after Weinstein’s Saba Capital Master Fund successfully argued that the Investment Company Act of 1940 allowed it to sue the big funds to defeat shareholder rights plans, known as poison pills, that stave off activist investors like Saba. Saba’s win was upheld by an appeals court, whose ruling will now face the high court’s scrutiny. Activist investors typically accumulate stakes in companies and then push for change by trying to gain seats on the board, often clashing with controlling shareholders like BlackRock and FS. The Investment Company Act, which Congress adopted to promote transparency in the securities market, includes protections for investors against the power of controlling shareholders. Saba said the big funds had improperly used a Maryland law to thwart a provision of the 1940 act that gives investors a right to sue, and made it harder to gain more control of a company. FS argued in its Supreme Court appeal that the 2024 trial court decision favoring Saba wrongly allows activist investors to base lawsuits over shareholder rights on the Investment Company Act. BlackRock didn’t join the appeal but reserved its right to participate in the case at the high court. The Supreme Court agreed to take the case after the Trump administration argued that leaving the lower-court rulings intact would interfere with government regulators’ enforcement powers and unfairly inject unpredictability into the funds’ operations and contract rights. The justices had asked the administration, which isn’t a party to the case, to weigh in on it. The government contended that investors have no right to challenge contracts that allegedly violate the 1940 statute. The case is FS Credit Opportunities Corp. v. Saba Capital Master Fund, 24-345.

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6/30/2025

Lantronix Enters Into Cooperation Agreement With Investor Group Led by Chain of Lakes Investment Fund LLC

Globe Newswire (06/30/25)

Lantronix Inc. (LTRX), a global leader in compute and connectivity IoT solutions enabling Edge AI intelligence, today announced that it has entered into a cooperation agreement with Lantronix stockholders Chain of Lakes Investment Fund LLC, Haluk L. Bayraktar, and Emre Aciksoz. Under the terms of the agreement, James (Jim) C. Auker will be appointed to the Lantronix Board of Directors and will be nominated for election at the Company’s 2025 Annual Meeting of Stockholders. The date of the Annual Meeting has not yet been announced. “Lantronix is committed to maximizing value for all Lantronix shareholders,” said Saleel Awsare, CEO and president of Lantronix. “We appreciate the constructive discussions with Chain of Lakes and are pleased to welcome Jim Auker to our Board. His perspective and experience will be valuable as we continue to execute on our strategic priorities.” “We value the collaborative approach taken by Saleel and the Lantronix Board to reach a positive outcome for the benefit of all Lantronix shareholders,” said Tim O’Connell, chief investment officer of Chain of Lakes. “We believe Jim Auker will be a strong addition to the Board and are confident his contributions will help guide Lantronix in its efforts to explore opportunities to enhance shareholder value.” Pursuant to their agreement with the Company, Chain of Lakes, Mr. Bayraktar and Mr. Aciksoz have agreed to customary standstill and voting commitments, among other provisions. The full agreement and required information in connection with the election of Mr. Auker to the Board will be filed with the SEC.

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6/30/2025

Avadel Shareholder Seeks Ousting Drugmaker’s Entire Board

Wall Street Journal (06/30/25) Glickman, Ben

An investor in the narcolepsy drugmaker Avadel Pharmaceuticals (AVDL) plans to call for shareholders to vote out the company’s entire board of directors, ratcheting up pressure on management in a tough environment for biopharmaceutical companies. ASL Strategic Value Fund plans to publish an open letter arguing that Avadel has mismanaged the launch of its main treatment, causing the company to miss out on hundreds of millions of dollars in revenue, according to a copy of the letter. Avadel makes a treatment for people with narcolepsy called Lumryz. The company has a market cap of around $900 million. The stock has fallen about 35% in the past year. ASL is calling for votes against all of Avadel’s director nominees at its annual meeting, which is scheduled for late July, according to the letter. The investment firm plans to vote its roughly $15 million of shares against Avadel’s directors. Avadel has for years been locked in litigation with its biggest competitor for narcolepsy treatments, Jazz Pharmaceuticals, over patent concerns. ASL is calling for Avadel to issue contingent-value rights to shareholders, or the rights to additional future payments, for possible proceeds from damages or settlements. (Avadel in one case is seeking damages in excess of $1 billion.) ASL also plans to reiterate a call for Avadel to hire an investment bank to explore alternatives, including selling the company, according to the letter. ASL made the same request in February, sending shares higher. A spokesman for Avadel said the company's board proactively engages with its shareholders, and directors have made personal investments in the company. He said the company was focused on unlocking the full value of its drug Lumryz. Shareholder activists have engaged with a number of biopharmaceutical companies, prompted by lackluster returns following economic and regulatory uncertainty. The S&P biotech ETF is down about 10% in the past year, compared with a 13% increase in the S&P 500 over the same period. In October, Starboard Value took a $1 billion stake in Pfizer (PFE), criticizing the drugmaker's performance and research spending. More common are situations in which investors agitate for smaller companies that have faced setbacks in research and development to shut themselves down and return cash to shareholders. Avadel's medication was approved by drug regulators in 2023. It now faces the challenge of increasing the number of patients using Lumryz. The company in May lifted its full-year revenue guidance after reporting improving demand metrics for Lumryz and better-than-expected sales in the first quarter.

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6/30/2025

Lamb Weston Settles with Jana, Giving Activist Big Voice on Board

Reuters (06/30/25) Herbst-Bayliss, Svea

Lamb Weston (LW) reached a settlement with Jana Partners which gives the activist investor a big presence on the french-fry maker's board and averts a bruising board fight. The agreement, announced on Monday, will add four of Jana's proposed director candidates to the board and two other mutually agreed-upon directors, expanding the board from 11 to 13 members. The Jana candidates are Bradley Alford, a former Nestle USA CEO who will become chairman; Timothy McLevish, a former Lamb Weston executive chairman; food industry executive and Continental Grain adviser Ruth Kimmelshue; and Jana's portfolio manager Scott Ostfeld. The two new mutually agreed on directors are Lawrence Kurzius and Paul Maass, who both have food industry experience as top executives. The truce marks one of the biggest settlements in terms of directors changing over this year and comes after Jana spent more than seven months pushing management for operational and capital improvement and possibly even a sale. Lamb Weston, based in Eagle, Idaho, with a market value of roughly $7.6 billion, supplies frozen potato products, including tater puffs and hash brown patties, to companies like McDonald's (MCD) and restaurant company Yum Brands (YUM). The company's stock price has dropped more than 35% in the last 12 months and slipped modestly to trade at $53.33 early on Monday. Lamb Weston CEO Mike Smith, who moved into the top job late last year after a poor earnings announcement amid shrinking demand for its products, welcomed the settlement. "We are confident this outcome is in the best interests of the company and all of our shareholders," he said. Jana had been laying the path to a bruising board fight and faced a deadline of Monday to nominate director candidates and officially launch a fight. In a survey, commissioned by Jana, roughly half of Lamb Weston's top 50 shareholders said they wanted the entire board thrown out, giving Jana ammunition to press its points. The hedge fund, which owns roughly 7% of Lamb Weston, teamed up with Continental Grain, a privately held company that owns and operates companies in food and agribusiness, on the investment. Jana has history with Lamb Weston. A decade ago, it pushed packaged food company Conagra Brands (CAG) to divest Lamb Weston, which had been a unit since it bought the french fry maker in 1988. In 2016, Lamb Weston began trading as a public company.

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6/28/2025

Toyota Group Unloads $8 Billion in Cross-held Shares as Divestments Pick Up

Nikkei Asia (06/28/25)

The Toyota group is accelerating the unwinding of cross-held shares, a Nikkei analysis shows, as markets increasingly demand efficient capital allocation and the automaker seeks funding for its electrification push. Nikkei calculated portfolio changes based on annual securities reports from nine Toyota group companies, including Toyota Motor (TOYOF), Denso (DNZOY), Aisin (ASEKY), and Toyota Tsusho (TYHOY). Securities sales totaled 1.21 trillion yen ($8.3 billion) for the fiscal year ended March — up roughly 50% from the year-earlier 837 billion yen. The companies sold 70 different stocks, leaving them with shares in 153 companies — down by roughly half from two years prior. Denso stood out by unloading 438.5 billion yen in shares — 3.5 times the year-earlier figure. It fully divested fellow group members Aisin and Jtekt (JTEKY). Denso bought Rohm (ROHCY) and other stocks to strengthen its presence in semiconductors but sold all cross-held shares in five listed companies in which it had invested. Toyota Motor sold 643.3 billion yen in stocks, roughly doubling on the year. Its reduction in cross-held shares extended beyond group members to include selling all holdings in Sumitomo Mitsui Financial Group and reducing its holdings in telecommunications company KDDI. Toyota reported 2.95 trillion yen in cross-held shares for 34 listed companies at the end of March, according to its securities report released last week. Compared with a year earlier, this amounted to a 16% reduction in value and to six fewer companies. Many Toyota group companies trace their origin to Toyota Industries and have long maintained a group structure characterized by mutual shareholdings. The group has been moving forward with restructuring, including a tender offer to take Toyota Industries private. Companies participating in the offer are selling all their Toyota Industries shares. As a result, Denso will not be invested in any group parts makers. Aisin will hold only Jtekt as a group parts maker. The group's move to unwind cross-held shares will significantly impact other Japanese companies. At the end of March 2024, Toyota Motor owned the fifth-most cross-held shares in Japan among listed companies and the most in the nonfinancial sector. Japanese companies are responding in part to increased scrutiny from markets. In March 2023, the Tokyo Stock Exchange encouraged listed companies to operate with an eye on the cost of capital and stock prices, leading many to target price-to-book ratios of 1 or higher. Cross shareholdings have long drawn criticism from institutional investors, which deem it a form of self-protection for management. The challenge for companies now is to efficiently invest the proceeds from the sales. Toyota has targeted return on equity of 20%, signaling a move toward improving the profitability of such after-sales services as autonomous driving and the provision of spare parts. The cross-shareholding ratio among listed Japanese companies has fallen to around a fifth of 1990 levels, according to the Nomura Institute of Capital Markets Research. The practice is "nearing its final stage," senior analyst Kengo Nishiyama said. Cross-shareholdings once served as a source of stability for companies, which will now have to find new investors. With the rise of activist investors, companies will need shareholders focused on medium- to long-term growth.

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6/27/2025

Southwest CEO Says He's Open to Adding Lounges — and Flights to Europe

Business Insider (06/27/25) Syme, Pete

Southwest Airlines' (LUV) transformation could become even more radical, as its CEO eyes plenty of potential changes. "Whatever customers need in 2025, 2030, we won't take any of that off the table," Bob Jordan said on Wednesday. "We'll do it the Southwest way, but we're not going to say 'We would never do that.'" He added that some people decide not to fly with Southwest because it doesn't offer "things like lounges, like true premium, like flying long-haul international." The Dallas-based budget airline has started overhauling its business model in recent months. Since the pandemic, passengers' spending habits have changed as more are now willing to pay for premium options. Coupled with increased fuel and labor costs, plus overcapacity in the domestic market, that spelled bad news for budget airlines' bottom lines. Southwest has also faced engagement from the activist investor Elliott Investment Management. The stock is up more than 10% over the past 12 months, but flat over the past five years. Last July, the airline announced that it would end its signature open-seating policy — instead encouraging customers to pay to choose where they sit and for upgrades like extra legroom. Ryanair (RYAAY), the European budget airline modeled on Southwest, introduced allocated seating more than a decade ago. And last month, Southwest ended its trademark policy of "two bags fly free." It now costs $35 for a first checked bag and $45 for a second one — although all loyalty members and credit card holders can get one for free. It's clear that Southwest is angling itself to encourage more loyalty and promote upgrades, but Jordan's comments suggest it isn't done just yet. The airline serves a number of destinations in Mexico, Central America and the Caribbean. Last month, Southwest asked the Department of Transportation for permission to fly to any of the 100-plus countries with which the US has an Open Skies agreement. In the filing, the airline said that being granted such permission would "promote competition and increase the traveling public's ability to access Southwest's high-quality, low-fare service." On Wednesday, Jordan said: "No commitment, but you can certainly see a day when we are as Southwest Airlines serving long-haul destinations like Europe. Obviously you would need a different aircraft to serve that mission, and we're open to looking at what it would take to serve that mission." Southwest's fleet comprises about 800 Boeing 737s.

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6/26/2025

Japan hits M&A Record of $232 Billion, Driving Asia Deals Rebound

Reuters (06/26/25) Bridge, Anton; Uranaka, Miho; Wu, Kane

Japan is driving Asia's M&A rebound in 2025 with a record $232 billion worth of deals in the first half, and bankers expect the trend to sustain fuelled by multi-billion dollar take-private arrangements, outbound investments and private equity activity. Management reforms to tackle chronic low valuations among Japanese firms are spurring a flurry of foreign and activist investor interest, while Japan's low interest rates - which support deals - mean the appetite for more deals remains strong, bankers say. The deals involving Japanese companies more than tripled in value in the first half, while in the same period Asia M&A value reached $650 billion, more than double the amount year-on-year, LSEG data showed. Bankers say government calls for better corporate governance, including the privatisation of listed subsidiaries, as well as outbound acquisitions by Japanese firms seeking new growth avenues will keep igniting mega deals. Moreover, Japan has been relatively insulated from global volatility despite the broader geopolitical and macroeconomic uncertainty, helping to underpin deals momentum, they say. A cohort of Toyota Motor (7203) group companies and telecoms giant Nippon Telegraph and Telephone (9432) took private listed subsidiaries in deals worth $34.6 billion and $16.5 billion respectively, among the largest transactions globally. "There are many other deals like these on the way and their number is increasing," said Kei Nitta, global head of M&A at Nomura Securities. SoftBank Group (9984) also led a new fundraising of up to $40 billion into ChatGPT maker OpenAI in the biggest private tech funding round in history. The long-standing trend of Japanese firms looking abroad for growth opportunities in the face of a shrinking home market has continued despite heightened uncertainty in the global economy. Japanese financial institutions, such as insurer Dai-ichi Life (8750) and Nomura Holdings (8604), announced major deals and bankers say demand remains robust across industries. "Debates over tariffs and foreign conflicts mean that some investment decisions are taking longer than usual and some customers have become more cautious, but we consider appetite for investment itself to remain very strong," Nitta said. Japanese firms themselves have also become more attractive acquisition targets as global firms have reconsidered their supply chains and distribution of resources over the past two years, Nitta added. However, there are some hurdles that could slow dealmaking in Japan. Uncertainty around the global economic outlook has made assessing companies' future prospects more difficult, leading to a disconnect in valuation expectations between buyers and sellers. This has caused an increasing number of deals to fail, said Atsushi Tatsuguchi, head of the M&A advisory group at Mitsubishi UFJ Morgan Stanley Securities. As part of the corporate reform drive, firms are under rising pressure to offload non-core business units, with private equity funds increasingly the destination for the hived off parts. Convenience store operator Seven & I Holdings (3382) – itself the target of a buyout bid from Canadian rival Alimentation Couche-Tard (ATD) – sold off a bundle of its superstores and other peripheral business units to Bain Capital for some $5.5 billion in March. "Carve-outs of operating companies' non-core assets will continue to be a trend in the near term," said senior deputy head of M&A advisory at SMBC Nikko Securities, Yusuke Ishimaru. Bankers say there is a strong pipeline of potential deals involving private equity firms. Potential deals to be announced in the second half include an acquisition of Japanese cybersecurity firm Trend Micro (4704), which has a market value of 1.32 trillion yen ($8.54 billion). Bidders included Bain Capital and EQT, Reuters reported earlier this year. "Private equity funds are also seen as promising buyers for taking listed companies private," Ishimaru said.

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