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Featuring all breaking news and in depth articles and editorial press coverage pertaining to shareholder activism and corporate governance.

Toshiba Readmitted to Top Tier of Tokyo Stock Exchange
Bill Ackman Pushes 3 Retailers to Get Directly Involved in U.S. Coronavirus Vaccine Drive
Intel’s New CEO Says Troubled Chip Project Is Recovering, May Still Outsource Some Manufacturing
Seed Company Corteva Faces Renewed Pressure
Elliott's Three-Point Plan Is Running Ahead of Schedule: How Milan's Project Is Growing
HYK Condemns Promotion of Hanjin's Heiress
Starboard Announces Eight Director Candidates for Corteva Board
Ovintiv Under Pressure From Kimmeridge
Intel to Cap Off Difficult Year Ahead of New Chief
Litt Seeks Apartment Income REIT Board Refresh, Committee to Review Options
TIM Board Meeting Could Set CEO on Road to New Deal
Top Toshiba Shareholder Seeks Court Approval to Call EGM by Itself
Engine Capital Sues Newly Formed Engine No. 1 Over Name
Starboard Seeks to Take Control of Corteva Board, Oust CEO
CVR Energy Pushes for Change at Delek US
Premier Foods Profits Set to Jump as Consumers Stick to Familiar Brands
Ryan Cohen Scores 300% Gain on Gamestop Stock in Under 6 Months
Elliott Management to Shutter Hong Kong Office
AppHarvest Announces First Harvest of Tomatoes From Flagship High-Tech Indoor Farm Shipping to Grocery Stores
Japan Inc Faces Potential Forced Sell-Off Of Cross-Shareholdings
Danone Shares Rise as Bluebell Capital Starts Piling on the Pressure
Companies Brace Themselves for New ESG Regulations Under Biden
Bluebell Capital Takes Aim at Danone
Aryzta to Scrap Stock-Market Listing in Dublin
Toshiba to Hold Shareholder Meeting as Pressure Mounts
Citigroup Beats Analysts’ Profit Estimates as Bank Releases Money Set Aside for Loan Losses
Icahn-Controlled Refiner CVR Seeks Shakeup at Rival Delek
Ovintiv Faces Proxy Fight Threat From Kimmeridge
GameStop Extends Surge as Chewy.com Founder's Arrival Stirs Buzz
Evolent Health Inks Deal to Sell Subsidiary to Minnesota Insurance Company
Intel CEO Bob Swan to Step Down, VMware CEO Pat Gelsinger to Replace Him
Investor Continues to Push for Change at First United Bank
GameStop Surges Most Ever in Short Squeeze After Cohen Move
Finance Chiefs Prepare for Potential Rule Changes, Return to the Office
Opportunities and Inefficiencies: How Bluebell Capital Is Reaping Rewards With Large-Cap Euro Focus
What Does Future Hold for Danone CEO With Investor on Scene?
European Firms Improve Gender Diversity Scores in Pandemic Year, Study Finds
Stars Align for BHP to Scrap Its UK Dual Listing
Why ESG Can No Longer Be a PR Exercise
Elliott Management Flees the Amateurs at the Gate
Can a Tiny Hedge Fund Push ExxonMobil Towards Sustainability?
Danone: Can an Investor Change One of Europe's Biggest Food Companies?
Tech Stocks Appear Ripe for Takeovers, M&A Survey Shows
Boards Are Obstructing ESG — at Their Own Peril
Opinion: Shareholder Voting Is Another Electoral Process That Needs More Access and Transparency
Compensation Season 2021
UK Is an Attractive Destination for Shareholder Litigation
Nasdaq Board Diversity Plan Attracts Broad Support
Proxy Campaign Outlook: What's in the Activists' Playbook for 2021?
Sustainability and ESG: The Governance Factor and What It Means for Businesses

1/22/2021

Toshiba Readmitted to Top Tier of Tokyo Stock Exchange

Financial Times (01/22/21) Lewis, Leo

Toshiba (TOSYY) will be reinstated into the top tier of the Tokyo Stock Exchange next week, after years of being relegated to second-tier status and under almost constant investor pressure. The company remains engaged in a battle with shareholders led by Effissimo and Farallon Capital, which requested extraordinary general meetings (EGMs) of shareholders in December. The funds are demanding that Toshiba clarify its overseas acquisitions plans and review the circumstances around last year's annual shareholder meeting, where CEO Nobuaki Kurumatani was nearly ousted. Toshiba has pledged to hold the EGMs as a combined event before the end of April, but Effissimo last week filed a petition at the Tokyo District Court requesting approval to call the EGM itself. The fund has this right under Japanese law, which ups the pressure on Toshiba to hold the meeting sooner. A record fine was imposed on the company in the wake of a profit-padding scandal in 2015, and later it was embroiled in a further crisis when its U.S. nuclear business failed. Toshiba ended its financial year in March 2017 with more debts than holdings, and its stock exchange tier was automatically reduced. Many investors and analysts at the time considered the demotion serious enough to justify a full delisting, and the decision not to do so was viewed as tacit government support for the company. Toshiba subsequently sold a number of assets from its subsidiary portfolio, including its flagship memory chip business to a consortium led by Bain Capital (BCSF). The company also issued $5.4 billion in new shares, which added a lot of activist and offshore funds to its register. Toshiba declared in a written statement that it had reformed its governance and internal control systems and took initiatives to "transform the corporate culture."

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1/21/2021

Intel’s New CEO Says Troubled Chip Project Is Recovering, May Still Outsource Some Manufacturing

CNBC (01/21/21) Leswing, Kif

Intel's (INTC) earnings report on Thursday said that the company's troubled 7-nanometer chip manufacturing technique is on track to be used to make chips sold in 2023. Intel reported earnings per share (EPS) at $1.52 and $20 billion in revenue for the fourth quarter, its last period with Bob Swan as CEO before he hands the reins to Pat Gelsinger. The results beat Refinitiv consensus estimates of EPS of $1.10 and $17.49 billion. “I am pleased with the progress made on the health and recovery of the 7-nanometer program,” Gelsinger said in a release. “I am confident that the majority of our 2023 products will be manufactured internally.” Intel’s troubled 7-nanometer technology has weighed on the company as it has struggled to match Asian chipmakers’ advances in chip manufacturing. Intel’s latest chips use a 14-nanometer or 10-nanometer process while competitor chips manufactured by external foundries such as TSMC and Samsung are currently using a 5-nanometer process. In December, Third Point and its CEO Dan Loeb said in a letter to Intel’s board that the lag behind competitors was a critical vulnerability. Loeb said Intel has fallen behind Asian chip foundries and urged Intel’s board of directors to make several changes to the company, including considering whether to outsource chip production or divesting parts of the business, such as acquisitions. Intel customers such as Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT) have developed their own processors, or have signaled they intend to do so. In the quarter ending in December, Intel said strength in PC sales helped it exceed its own expectations. It said that 33% more PCs with Intel chips were sold than during the same time last year, especially laptops. Intel increased its cash dividend by 5% to $1.39 per share, though its forecasts for revenue, EPS, and operating margin for Q1 were all down year-over-year. Sales for Intel’s data center group, which sells chips to enterprises that run servers, were down 16% in the quarter ending in December compared to a year ago. Intel said that Mobileye, its subsidiary working on self-driving car technology, saw sales rise 39% during the quarter compared to the same time last year, though it is still a small part of the company. Gelsinger, who was most recently the CEO of VMWare (VMW), is expected to push Intel to become more competitive in terms of chip manufacturing.

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1/21/2021

Seed Company Corteva Faces Renewed Pressure

Wall Street Journal (01/21/21) Bunge, Jacob

Less than two years after Corteva Inc.’s (CTVA) launch, the crop seed and pesticide maker is facing pressure from investors. Starboard Value LP confirmed Thursday that it has nominated a slate of directors to take over two-thirds of Corteva's board. The firm, which has a 1.3% stake in Corteva, called for the company to replace CEO Jim Collins, saying Corteva has been slow to improve its profitability, missed opportunities to improve its operations, and hasn't held Collins accountable. Starboard said it first invested in Corteva about 18 months ago and contacted the company's board privately in September to discuss Corteva's performance and leadership. Starboard's Jeff Smith said that while Corteva's board engaged with the firm, it hasn't acted and has refused to speak with the CEO candidate Starboard proposed. On-and-off discussions with Starboard since the fall haven't yielded a settlement agreement that could ward off a full-blown proxy fight at the company's annual meeting this spring. Activist investors played a large role in Corteva's formation from the agricultural businesses of DuPont and Dow Chemical, both of which contended with shareholder activism ahead of the 2017 merger that fused the two industrial conglomerates. In 2015, Trian Fund Management LP launched a battle to secure seats on DuPont's board, saying the industrial stalwart had grown unwieldy and needed to be broken up into smaller, more efficient companies. Trian narrowly lost its proxy battle at DuPont, and Third Point agreed to accept two seats on Dow's board rather than launch its own campaign. Dow and DuPont shareholders approved the deal in 2016, but firms including Third Point, Jana Partners LLC, and Glenview Capital Management criticized the companies' initial plans to divide up a wide-ranging portfolio of businesses. The company later shifted around businesses generating more than $8 billion in annual revenue.

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1/20/2021

Engine Capital Sues Newly Formed Engine No. 1 Over Name

Bloomberg (01/20/21) Deveau, Scott

Engine Capital Management is asking a judge to block another investor from calling itself Engine No. 1, saying the name could cause confusion in the investment community. Engine Capital alleges in a lawsuit filed this month in Manhattan federal court that, because both firms are shareholder activists, Engine No. 1 is engaging in willful trademark infringement. Engine Capital is seeking to bar the defendant from using Engine No. 1 or similar names, plus triple damages, according to the complaint. Engine Capital has used its name for its management and investment services, including as a shareholder activist, dating back to 2013, according to the lawsuit. It said it has gained “notoriety and influence” since then for its Engine-branded family of funds and activist campaigns. As a result of the reputation it has built for itself, Engine Capital said it has “successfully negotiated board representation with many publicly traded companies.” It has pushed for changes at several companies, including last year at Matrix Service Co. (MTRX) and CIM Commercial Trust Corp. (CMCT). Tech investor Chris James founded Engine No. 1 in December 2020 with the goal of investing in companies that can have a positive impact on society and the environment. In December, Engine No. 1, with the support of the California State Teachers’ Retirement System, said it planned to nominate four directors at Exxon (XOM), arguing the oil giant was underperforming, needed to diversify its business, and align executive pay with shareholders’ interests, among other measures.

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1/20/2021

Starboard Seeks to Take Control of Corteva Board, Oust CEO

Wall Street Journal (01/20/21) Lombardo, Cara

Sources report that Starboard Value LP aims to take over Corteva Inc.'s (CTVA) board and oust CEO Jim Collins, citing mediocre performance. The investor has privately nominated eight directors to Corteva's board, with Collins' prospective replacement unnamed. Starboard in October reported a stake of about 1.6% in Corteva. Starboard CEO Jeff Smith announced then that the company's adjusted earnings before interest, taxes, depreciation, and amortization showed little improvement from its founding in 2019, trailing peers. In response to an inquiry on Smith's comment, Collins acknowledged that the business has room to extend its margins. "Probably the only question in that whole discussion is our view of the timing of that improvement," he said. Starboard has been engaged in on-and-off discussions with Corteva since the fall and nominated board members before the deadline to do so in late December. Attempts to avoid a proxy fight at the annual shareholders meeting in the spring have so far come to nothing, and some sources said Corteva's current board fully backs Collins. Corteva and other farm suppliers have had a difficult few years, with a string of bumper crops in the United States and elsewhere helping increase global grain reserves and reduce crop prices, while less income for growers has made it harder for seed and pesticide suppliers to boost prices. With crop prices rallying in recent months, Collins and other Corteva executives have highlighted the company's new line of crop seeds.

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1/20/2021

CVR Energy Pushes for Change at Delek US

Houston Business Journal (01/20/21) Mann, Joshua

CVR Energy Inc. (CVR) has adopted an activist investor stance with Delek US Holdings Inc. (DK). CVR CEO David Lamp sent a letter to Delek’s chairman, Uzi Yemin, outlining changes he would like to see at the company. Those changes include a priority on free cashflow over growth, retail monetization, and a focus on core refineries alongside an exit from certain non-core assets. Both CVR and Delek are refining companies in the downstream oil and gas business. CVR says its 15% stake in Delek makes it the Tennessee-based company's largest stockholder. CVR will propose three new directors to Delek’s board to replace some of Delek’s nominees in the company’s upcoming annual shareholder meeting, Lamp said. Some more specific changes CVR advocated for in the letter included the cessation of refining operations at Delek’s Krotz Springs and El Dorado refineries, the sale of the company’s retail business, and cuts to its general and administrative costs. Lamp also said Delek should exit its non-core supply and trading activities. In response to the letter, Delek said it will consider CVR’s nominations when it receives them but noted existing plans to cut its capital expenditure budget by 40% in 2021. CVR was similarly engaged in 2012 when Carl Icahn acquired a controlling stake; in 2018, CVR added two executives from Icahn Enterprises LP (NYSE: IEP) to its board. As of the start of 2020, Icahn owned about 71% of CVR's interest.

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1/19/2021

Premier Foods Profits Set to Jump as Consumers Stick to Familiar Brands

Financial Times (01/19/21) Evans, Judith

Premier Foods (PFODF) expects a sharp rise in trading profit after consumers stuck at home turned to its familiar brands. The pandemic has boosted a turnaround at Premier, which had been battling pressure from investors. It said the three months to the end of 2020 were “another exceptional quarter of trading,” with sales of its branded products up 16% in the first three quarters of its financial year. Its Mr. Kipling cake brand was on track for a record year with a new U.S. distribution deal through Weston Foods starting in 2021. International sales shot up 43% year-on-year during the quarter, although Premier said that figure was flattered by stockpiling ahead of the Jan. 1 Brexit transition. Premier's Bisto gravy and Batchelors dried foods products both benefited from double-digit sales growth last year. The sales bump helped the FTSE 250 group to launch TV advertising campaigns for some of its brands. Trading profit is set to be 12% higher in the year to March 2021, and the ratio of net debt to earnings is set to fall below two times. The company will redeem £40 million of bonds in February, after disposing of its stake in the Hovis bread brand for £37 million late last year. It had faced pressure from two investors, Paulson & Co. and Hong Kong-based hedge fund Oasis, but this month announced that a representative of Paulson had quit its board as the group cut its shareholding.

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1/19/2021

AppHarvest Announces First Harvest of Tomatoes From Flagship High-Tech Indoor Farm Shipping to Grocery Stores

Business Wire (01/19/21)

AppHarvest, an AgTech company building some of the country’s largest high-tech indoor farms to grow affordable fruits and vegetables at scale, has announced that its first-ever harvest—Beefsteak tomatoes from its 60-acre Morehead, Ky., flagship indoor farm—will start to roll out in grocery stores this week. Shoppers will be able to find the Beefsteak tomatoes in the produce aisle, co-branded with Sunset Grown, and the products are expected to be comparable in price to standard tomatoes. AppHarvest’s Beefsteak tomatoes are chemical pesticide-free, non-GMO, and are grown with 100% recycled rainwater. This first harvest occurs as AppHarvest continues expansion plans for additional indoor farms to meet the increasing demand for sustainably grown U.S. produce. The company is preparing to list publicly after the closing of the previously announced business combination of AppHarvest with Novus Capital Corp. (NOVS) and then will trade on Nasdaq under the ticker APPH. In August 2020, AppHarvest announced that food entrepreneur Martha Stewart and author and investor J.D. Vance would join the board of directors, alongside Inclusive Capital Partners founder and managing partner Jeffrey Ubben and Rise of the Rest Seed Funds partner Anna Mason and others committed to transforming the future of agriculture and supporting entrepreneurial efforts in Middle-America. AppHarvest’s high-tech indoor farms are designed to use 90% less water with yields that are up to 30 times higher compared to traditional open-field agriculture on the same amount of land.

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1/19/2021

Japan Inc Faces Potential Forced Sell-Off Of Cross-Shareholdings

Financial Times (01/19/21) Lewis, Leo; Inagaki, Kana

Corporate Japan is facing a historic reshuffle of the Tokyo Stock Exchange and aggressive new guidelines from proxy advisers designed to compel a selldown of the country’s widely criticized “cross-shareholding” networks. Cross-shareholdings are interconnected portfolios of ownership by listed Japanese companies in each other, which protect underperforming managements with a cushion of automatic investor support. Although cross-holdings have been in decline for years, companies justify them as necessary to maintain business relationships, frutstrating fund managers who view such webs as a recipe for complacency, low returns on equity, and poor governance. Almost 11% of Japan's listed companies have a listed shareholder owning a slice of more than 30%, compared to 0.9% in the U.S. and 0.2% in the UK. In a significant overhaul in April, the TSE will streamline its six boards and 3,753 listed stocks to three tiers: prime, standard, and growth. Membership of the desirable prime index will depend on the March 31 level of free-floating market capitalization, excluding cross-held shares. The change should in theory push a number of companies into asking cross-holders to sell down stakes before end-March to qualify for the prime index and the huge investment that will track the new index. In October, proxy adviser ISS implemented new guidelines calling for investors to vote at shareholder meetings against directors at any company that allocates 20% or more of its net assets to cross-shareholdings. According to Goldman Sachs (GS), about 9% of companies listed on the TSE's first section will not meet the ISS requirement. While many analysts foresee a decisive impact on Japan's companies, others warn investors to expect a reform-crushing campaign from the powerful Keidanren business lobby. ISS and Glass Lewis are not as influential in Japan as in the U.S., analysts note, and separate efforts to convince investors to vote against underperforming managements have failed. Recent activist campaigns have targeted cross-held shares, resulting in accelerated sales of strategic holdings by companies, but many remain.

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1/19/2021

Danone Shares Rise as Bluebell Capital Starts Piling on the Pressure

MarketWatch (01/19/21) Saigol, Lina

Bluebell Capital Partners is calling for food and beverage company Danone (DANOY) to replace its chairman and CEO Emmanuel Faber following what it calls a "disappointing" share-price performance under his leadership. In a Nov. 19 letter to Danone, Bluebell urged the company's board to start looking for a new CEO and also split the chairman and CEO roles. Since Faber took over in 2014, Danone has delivered total shareholder returns of 21% compared with 56% for its index, Bluebell noted. “In our view, this fails to reflect the quality of the group assets,” Bluebell said in the letter. In November, Faber announced a reorganization that included cutting up to 2,000 jobs, or 2% of Danone's global workforce, and carrying out a strategic review of its portfolio of brands. Analysts at Barclays said investors would want clarity on Danone’s water division, which was down 28% in the second quarter of 2020 and 13% in the third quarter, as the Covid-19 pandemic shut down bars and restaurants. Bluebell also highlighted its concerns over Faber’s dual focus on financial performance and environmental and social goals. Bluebell isn’t the first investor to push for change at Danone. In 2012, Nelson Peltz's Trian Partners built a 1% holding in the company and agitated for change, selling the stake a year later after then chief executive Franck Riboud departed the company. Five years later, Keith Meister's Corvex Management took a $400 million stake in the French group, “but again it didn't really change anything,” said Barclays analysts. However, they noted that Bluebell, which is run by the former chief executive of Italian jeweler Bulgari, Francesco Trapani, has had some success agitating for change in other companies such as Lufthansa (LHA) and Hugo Boss (BOSS).

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1/18/2021

Bluebell Capital Takes Aim at Danone

Financial Times (01/18/21) Abboud, Leila

Bluebell Capital Partners, a London-based hedge fund founded by former Bulgari CEO Francesco Trapani, has acquired a stake in yogurt maker Danone (DANOY) and is urging the replacement of Chairman and CEO Emmanuel Faber due to "disappointing" share performance. Bluebell has not publicly revealed the size of its Danone share, whose disclosure is only mandatory if it passes the 5% threshold that triggers a filing to France's market regulator. Bluebell in mid-November submitted a letter calling on Danone's board to begin looking for a new CEO, and recommending the division of chairman and CEO roles. "The underperformance of Danone's share price has been driven, in our view, by a combination of poor operational record and questionable capital allocation choices," the fund stated in the letter. Bluebell further declared that Danone's total shareholder returns have trailed larger rivals Nestlé (NSRGY) and Unilever (UL) since Faber assumed the helm in October 2014. Danone's shares are up 2.7% since then, while Nestle's have increased 45% and Unilever's 72%. When queried about Bluebell's emergence, Danone said: "We value constructive dialogue with all our shareholders. The leadership team of Danone is highly focused on delivering long-term sustainable value." The company defended its "strong results" under Faber, citing its 3.1% average organic sales growth and 50% earnings per share growth from 2014 to 2019. The fund's arrival coincides with a problematic situation for Danone, with lockdowns depriving its bottled water business of its biggest profits at restaurants, bars, and convenience stores. Increasing costs of transport, raw materials, and logistics also have taken a bite. In response, Faber announced a major restructuring in October entailing up to 2,000 job cuts, and pledged to sell assets and trim the product portfolio. Some shareholders also doubt Faber's commitment to environmental and social goals, and are frustrated by Danone's inability to meet its financial targets. In June, investors voted for Danone to become a purpose-driven company to bring "health through food" to consumers. Danone's legal status requires it to not only generate profit for shareholders, but also do so in a way indicating that it will benefit its customers' health and the planet. "However, we feel that under the leadership of Mr. Faber, Danone did not manage to strike the right balance between shareholder value creation and sustainability," Bluebell said. The fund further noted how Unilever and Nestlé were also "extremely committed to sustainability" yet realized better shareholder returns. France has seen an increase in investor campaigns in recent years, mounted by hedge funds including Elliott Management and Amber Capital, taking aim at blue-chip companies previously thought to be untouchable. As a consequence, last year France's government mulled tighter controls on short sellers and activists, but ultimately implemented more modest measures, including a requirement for better disclosure.

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1/15/2021

Citigroup Beats Analysts’ Profit Estimates as Bank Releases Money Set Aside for Loan Losses

CNBC (01/15/21) Son, Hugh

On Jan. 15, Citigroup posted fourth-quarter results that beat analysts' estimates for profit as it released reserves for loan losses. Citigroup said earnings declined by 7% to $4.63 billion, or $2.08 a share, compared with the $1.34 a share expected by analysts surveyed by Refinitiv. Companywide revenue declined by 10% to $16.5 billion, below the estimate of $16.7 billion. Citigroup has been hobbled by relatively poor performance compared with competitors. The results have frustrated investors including ValueAct. The bank released $1.5 billion in reserves for credit losses, a move that was higher than predicted by analysts. That compared with a reserve build of $436 million in the third quarter and $253 million a year earlier. As a result, credit costs in the period were more than $2 billion less than a year earlier. Outgoing CEO Mike Corbat said. "As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of Covid-19." Citigroup shares fell 1.8% on Jan. 15 in premarket trading. Citigroup made history when it announced Jane Fraser was taking over as CEO, making it the first major bank to be managed by a woman. Fraser is slated to address investors and analysts for the first time on Jan. 15. Shareholders want to hear how Fraser, a former McKinsey partner who oversaw Citi's Latin American operations before becoming president in 2019, will improve returns at the company. Citigroup has said it expected fourth-quarter trading revenues to rise by 15% from a year earlier, while investment banking fees should rise by 10% to 15%.

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1/14/2021

Icahn-Controlled Refiner CVR Seeks Shakeup at Rival Delek

Bloomberg (01/14/21) Freitas Jr., Gerson; Genovese, Meghan

Carl Icahn's CVR Energy Inc. (CVI) is pushing for a shakeup at Delek US Holdings Inc. (DK) while denying that a takeover bid is under consideration. CVR CEO David L. Lamp said his company wants Delek to sell its retail business and cease operations at two refineries that are at competitive disadvantage, with no prospect of consistently generating cash. He continued that Delek should accept the replacement of three directors with CVR nominees at the next shareholders meeting. "Delek desperately needs new strategic direction," Lamp stated in a letter to Delek Chairman Uzi Yemin. "We would like to work collaboratively with you to replace three of your nominees at Delek's upcoming 2021 Annual Meeting." CVR's campaign coincides with investors increasingly pressuring struggling energy companies to trim costs, reduce capital spending, and boost profits. Lamp said Delek's stock is "undervalued," and Delek responded that it welcomes discussions with investors, and that a board committee "will evaluate any nominees from CVR if and when they are received." CVR is Delek's biggest shareholder with a stake of about 15%, according to Lamp's letter. Icahn controls more than 70% of CVR, and he posted a revision to a March 2020 filing where a potential takeover of Delek was raised, echoing Lamp's letter. Delek stock climbed 5.5% on Thursday, extending its gain to 87% since Icahn's initial filing on March 19, 2020, versus a 58% appreciation in the S&P 500 over the same period. Lamp also articulated in his letter that CVR has no interest in a takeover of Delek. The letter additionally urges Delek to sell its retail business "at current high prices while retaining wholesale marketing," and to halt refining operations at the Krotz Springs and El Dorado refineries and transition them to terminals, renewable diesel production, or to other operations. Also advised is for Delek to discontinue non-core supply and trading activities and all other operations that add no value to its core refining business. CVR further calls on Delek to streamline its corporate structure and reduce general and administrative expense significantly, and to stop "dropping down core refining assets into Delek Logistics Partners LP at value-destroying prices."

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1/14/2021

Evolent Health Inks Deal to Sell Subsidiary to Minnesota Insurance Company

Washington Business Journal (01/14/21) Gilgore, Sara

Health system consultancy Evolent Health Inc. (EVH) will sell part of its business to Bright Health Management Inc. Evolent will sell wholly owned subsidiary True Health New Mexico Inc., which it formed after acquiring certain assets in 2018, for $22 million plus risk-based capital. The deal comes after Evolent entered into a cooperation agreement with investor Engaged Capital LLC in December. As part of that deal, the company’s board of directors formed a new strategy committee to strengthen operations and cut costs. Craig Barbarosh, a partner with Katten Munchin Rosenman LLP and board director for multiple companies, joined the committee and board as part of that arrangement. The deal with Engaged, Evolent's largest shareholder with a 10% stake, materialized after Engaged said in August it wanted the company to explore improvements to its core business including a potential sale. In July, Evolent had entered a deal to sell assets from subsidiary Passport Health Plan to Molina Healthcare Inc. (MOH). Evolent had acquired insurance provider Passport in May 2019 for $70 million and a 30% equity stake. Evolent was then sued over the acquisition in a class-action lawsuit alleging securities law violations. Evolent reported $264.6 million in revenue for the third quarter of 2020, up 20.2% from $220.1 million in revenue for the third quarter of 2019. Of that, revenue from True Health premiums totaled just $29.5 million for Q3 of 2020, down from $43.8 million for Q3 of 2019. This week Evolent saw more change to its board, with Bruce Felt’s departure and Kim Keck’s appointment, both effective Monday per Securities and Exchange Commission filings.

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1/13/2021

GameStop Surges Most Ever in Short Squeeze After Cohen Move

Bloomberg (01/13/21) Lipschultz, Bailey; Calderone, Gregory

Within days of adding Ryan Cohen, an investor and Chewy Inc. (CHWY) co-founder, to GameStop Corp.'s (GME) board, GameStop experienced an unprecedented stock increase. A rush of short covering and day trading caused the company's shares to rise by 94% on Jan. 13. Traders betting on Cohen's plans to revitalize the chain similar to how he handled Chewy contributed to the now three-day rally with the stock, in contrast to years of underperformance. GameStop shares climbed by as much as 118% in the three days since news of Cohen's addition to the board, and reached the highest price since November 2015. Short interest in GameStop remains near recent highs, with 138% of shares available for trading currently sold short, data compiled by S3 Partners shows. Cohen's spot on the board, along with two other former Chewy colleagues, was praised by financial analysts. Telsey's Joseph Feldman said in a Jan. 12 note that the three individuals will "make GameStop a more digitally focused retailer," while Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, asserted, "This is much like the chicken and egg question—did long buying lead to short covering/squeeze or short covering/squeeze lead to long buying?" Overall call volume was outpacing put volume by a rate of 2-to-1 by noon Eastern time on Jan. 13. Total call volume increased to more than four times its 20-day average, led by the January $40 calls. Those contracts are set to expire on Jan. 15.

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1/13/2021

Finance Chiefs Prepare for Potential Rule Changes, Return to the Office

Wall Street Journal (01/13/21)

Finance chiefs, bankers, and deal advisers say their economic outlook is improving as Covid-19 vaccines are distributed across the United States, while finance leaders are preparing for major regulatory changes. According to mergers and acquisitions executives, the second half of 2020 saw an uptick in corporate deal-making following a spring slump, and this could persist throughout 2021 as stock valuations stay high and confidence among senior executives continues to improve. "We're relatively optimistic about this year," said Bank of America Corp.'s (BAC) Steven Baronoff, who recommended that CFOs should concentrate on deals that make sense in the long term, rather than offer short-term gains in earnings. "Shareholders...more than ever before are looking for that," he explained. The incoming Biden administration could influence M&A in the year ahead, as the new president can appoint heads of agencies that vet mergers or enforce antitrust laws. Cravath, Swaine & Moore's Faiza Saeed said companies should be ready to show how potential deals could impact local communities, noting that "it's going to be important to be able to tell a story that it's good for the community in which you operate, and good for job creation." Meanwhile, investors, whose activism was mostly sidelined during the pandemic, could make a comeback in deal-making. Joele Frank, founder of the financial communications firm that bears her name, said she has witnessed more companies evaluating how they would defend their strategies from investor criticism.

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1/22/2021

Opportunities and Inefficiencies: How Bluebell Capital Is Reaping Rewards With Large-Cap Euro Focus

Hedgeweek (01/22/21) Leask, Hugh

Bluebell Capital Partners' Active Equity Fund has gained significant momentum since its launch in November 2019. The fund has generated a 6% return during 2020, gaining good momentum in the latter half of the year, against a Eurostoxx 600 return of -4%. Bluebell was founded by current CIOs Giuseppe Bivona and Marco Taricco, as well as Chairman Francesco Trapani. Bluebell runs campaigns focused around large cap companies, predominantly in Europe; its current portfolio comprises nine positions in Europe and one in the U.S., with a medium-term investment horizon. Recent investments have included Italian financial services firm Mediobanca (MDIBY), Dutch wind turbine manufacturer Vestas (VWDRY), German airline Lufthansa (DLAKY), Canadian movie theater chain Cineplex (CPXGF), and German luxury goods company Hugo Boss (BOSS). Taricco believes Bluebell's investment approach is “more conducive and more adaptable” to larger companies than smaller ones. Taricco also touches on how the firm's ability to mobilize more capital for campaigns stems partly from the networks it built and fostered during its early years as an advisory business. Bluebell uses a range of campaign styles, though Bivona suggests a collaborative approach is often more conducive to broader campaigns when external investors are involved. While 2020 was a particularly difficult economic environment, Bluebell gained “enormous traction and visibility in most of our campaigns,” Bivona observes. The firm also has a strong focus on environmental, social, and governance issues, which Bivona says form a core part of each of its investment campaigns. With the fund's first full year of trading completed, Bivona and Taricco are optimistic for the year ahead, noting that “significant inefficiencies” remain across large swathes of markets and companies in Europe.

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1/20/2021

Stars Align for BHP to Scrap Its UK Dual Listing

Sydney Morning Herald (Australia) (01/20/21) Knight, Elizabeth

To understand how BHP (BHP) has come to abandon its UK listing, one can look back a few years to when 5% shareholder Elliott was pushing for an end to the Australian miner's dual listing. At that point, there was a $1 billion tax roadblock that stood in the pathway of unification. One large element of that obstacle crumbled in 2018 and 2020 when various tax authorities dealt with the issue of BHP using Singapore as a conduit through which it sold its product. Another impediment to BHP cleaning up its capital structure was the treatment of tax losses from NSW coal mines. As part of a corporate tidy up in the lead up to an asset sale, BHP announced on Wednesday it had written down the value of these tax losses. With both the tax issues resolved, BHP's largest impediment now is the will to proceed. When Elliott began agitating for listing unification of BHP Group Ltd. and BHP Plc back in 2017, BHP was disinclined to entertain the proposition. Elliott's lobbying effort was then part of a far larger push for the resource conglomerate to sell assets, reallocate capital, and apply more rigor to acquisitions. It argued that the unconventional onshore oil/gas shale assets should be divested as a priority and the offshore conventional oil assets should be next. Former BHP chief executive, Andrew Mackenzie, ultimately did sell the shale assets for a tidy price of $10.8 billion. The company didn't agree with Elliott's views on conventional oil and it remains one of BHP's key commodity pillars. At some point in 2019 Mackenzie appears to have engineered a truce with Elliott. By 2018 BHP management appeared to have softened its stance on the topic of reunification, suggesting that it would look to simplify its capital structure.

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1/19/2021

Tech Stocks Appear Ripe for Takeovers, M&A Survey Shows

Bloomberg (01/19/21) Kim, Crystal

Tech stocks including ACI Worldwide Inc. (ACIW) appear to be likely takeover candidates in 2021 as the outlook for merger and acquisition (M&A) activity improves. Companies in tech and tech services made up nearly a quarter of M&A watchlists in a Bloomberg survey of a dozen event-driven traders, analysts, strategists, bankers, and fund managers. ACI Worldwide Inc. landed on watchlists last month after investor Starboard Value LP, wielding its 9% stake, urged the company to sell itself amid industry consolidation. Global Payments Inc. (GPN) also showed up as a takeover candidate after talks for a merger deal between it and Fidelity National Information Services Inc. (FIS) fell apart. Payments firm deals stand to continue, with the likes of JPMorgan Chase & Co. (JPM) chief Jamie Dimon on Friday saying that he would consider such an acquisition. M&A transactions in technology, media, and telecommunications ticked up in the back half of 2020 amid a flood of big-ticket transactions. Property information and analytics provider CoreLogic Inc. (CLGX) and defense and transportation systems provider Cubic Corp. (CUB) were mentioned the most. Both are tech-related companies that sit in the industrials sector and landed on watchlists as a result of activist involvement. DXC Technology Co. (DXC) was also mentioned more than once, and was recently confirmed to be the target of French IT firm Atos SE.

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1/14/2021

Nasdaq Board Diversity Plan Attracts Broad Support

Corporate Secretary (01/14/21) Maiden, Ben

Last month Nasdaq filed a proposal with the Securities and Exchange Commission (SEC) to adopt new listing rules that would focus on promoting diversity. The rules would require companies to have, or explain why they do not have, at least two diverse directors, including one who identifies as a woman and one who identifies as either an underrepresented minority or LGBTQ+. Nasdaq’s efforts to promote diversity on boards has received broad support, especially for its "comply or explain" approach. The Council of Institutional Investors (CII) supported the proposal, saying that diverse boards can boost financial performance, but that quotas may lead to "check-the-box" diversity. New York City Comptroller Scott Stringer also voiced support for Nasdaq’s plan, writing that the proposed rules would "provide investors with vital information to inform investment and proxy voting decisions." At the same time, Stringer recommended that the proposal go further by requiring companies to identify their directors as individuals, not in aggregate, and that the proposed director matrix requirement be widened to include their skills, experience, and attributes. Stringer last year led a campaign that resulted in 34 S&P 100 companies agreeing to release the composition of their workforce by race, ethnicity, and gender through their annual EEO-1 report data. On the corporate side, companies including Microsoft (MSFT) and Facebook (FB) have expressed support for the proposal. David Bell, co-chair of the corporate governance practice at Fenwick & West, argues that the statistical data sought might create privacy concerns for some directors. Bell suggests this potential issue could be avoided by modifying the board diversity matrix. The CFA Institute said it generally supports Nasdaq's plan but encourages it to consider whether the proposed diversity definition could be improved by adding factors such as disability and veteran status.

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