Shareholder Activism — The New Dialogue. The Changing Landscape in the EU
& Lessons Learned from the US. 8 April, 2014. Panelists: Selina Sagayam ...
Shareholder Activism — The New Dialogue The Changing Landscape in the EU & Lessons Learned from the US 8 April, 2014 Panelists: Selina Sagayam & Dennis Friedman (Gibson Dunn), Cas Sydorowitz (Georgeson), Jonathan Kaye (Moelis) and Olly Scott (Bell Pottinger)
Your Speakers Selina Sagayam Gibson Dunn
Dennis Friedman Gibson Dunn
Cas Sydorowitz Georgeson
Jonathan Kaye Moelis
+44 20 7071 4263
+1 212 3513900
+ 44 870 703 0302
+1 212 883 3540
[email protected]
[email protected]
[email protected]
[email protected]
Selina is a corporate finance partner in the London office of Gibson Dunn. She is recognized as a leading lawyer in the fields of Corporate/M&A and corporate governance. She spent two years seconded in the senior role as The Secretary to the UK Panel on Takeovers and Mergers and has extensive experience advising on transactions involving public companies, including issuers and shareholders on (hostile) takeovers and public activist situations.
Dennis is a partner in the New York office of Gibson, Dun. He has led the Firm's Mergers and Acquisitions Practice for many years. He is a widely recognized corporate lawyer with extensive experience in the mergers and acquisitions, corporate governance and capital markets areas. In addition to his 35-year-plus legal career, Dennis was an investment banker at several major Wall Street firms, where he was a senior M&A banker and also the head of a merchant banking group (1986 to ‘92).
Cas has been with Georgeson for close to 15 years, bringing with him five years' experience in international investor relations and shareholder identification. Cas is responsible for Georgeson's Northern European Proxy and Corporate Advisory business. He has an expert knowledge of global proxy voting mechanics and key governance matters affecting issuers and shareholders globally. Having worked for several activists and against many more he has in-depth experience to support investors or issuers in complex, sensitive activist campaigns.
Jonathan is a Managing Director and Partner at Moelis & Company, based in New York, where he leads the Firm's shareholder activism defense practice. Jonathan has broad experience working with companies in dissident shareholder situations across sectors and in campaigns ranging from private settlement to public and acrimonious disputes. Jonathan joined Moelis from Citigroup, where he was a Managing Director and founded the Activism Defense practice.
Olly Scott Bell Pottinger +44 207 861 3891
[email protected]
Olly has over a decade of communications experience across several sectors, including institutional and retail financial services, asset management, energy, retail and leisure. His work focuses on helping companies achieve their objectives through reputation development and defence by undertaking programmes that complement their wider communications. Olly specialises in financial and business issues public relations, IPOs, shareholder activism, crisis management and campaigns.
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Overview of Presentation & Materials •
•
• •
• • •
Evaluating activism volume: – How significant is the trend? – Why are certain companies targeted? What has changed recently? Identifying typical agenda items that activists seek: – Recent examples in the US and Europe The “new dialogue”: Are there differences in the US and UK/Europe? Activist strategies and campaigns: – Points of note for activists and issuers – Differences between the US and UK/Europe Issuer’s perspective: Preparation, preparation, preparation Conclusion: What really matters to issuers and activists? Q&A
Appendices: (1) Activist Agenda & Strategies (2) Activist Profile Data (3) Investment Allocations 3
Evaluating the Volume of Shareholder Activism In the US: • Over 400 campaigns in each of 2012 and 2013 • 90 proxy fights last year alone • Significant increase in AUM dedicated to activism • “New Wave” of smaller funds attacking the small to midcap market
414 campaigns
In Europe: • Over 60 campaigns in each of 2012 and 2013 • Well below US levels…but 50% up from 2012 • Several prominent activists have invested in or set up shop in Europe (Cevian, Elliott, Sandell and others) • Relative valuation, opportunity for breakups and macroeconomic recovery have set the stage for increased volumes
90 proxy fights
US: 2013
Europe: 2013
Sources: Shark Repellent; 13D Monitor, Wall Street Research, Dealogic M&A Manager
Where is Activism Taking Place? •
Regional Split 2013 (2012) (Activist Insight)
Industry Split (2012-2013) (Shark Repellent) Utilities 2% Materials 7%
Consumer & Retail 23%
Telecom 5%
Healthcare 9%
Industrials 9% Technology 17%
Energy 14% Financials 14%
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Why Companies are Targeted and What’s New? What matters to activists? • Vulnerability from a governance perspective (annually elected board in particular) • Available cash • Debt capacity • Relative valuation vs peers • Underperformance vs peers • Liquidity • Potential attractiveness to acquirers • Any balance sheet event or asset sale that could drive immediate positive impact to share price
What (surprisingly) matters less than it used to • Vulnerability from a governance perspective (annually elected board in particular) • Market cap size • Returns • An attractive multiple • Likelihood (or possibility) of winning a proxy/ requisition or effecting board control
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The Activist’s Agenda: Recent Examples in the US Agenda
Target
Activist
Agenda
Target
Activist
Share repurchase (return capital)
Greenlight
Board representation
JANA
Reduce costs (operational improvements)
Corvex
Breakup or split
Trian
Revise management compensation
CalPERS
Influence M&A
Eminence
Remove management/ board
Corvex, Related
Revoke rights plan
Third Point
Elliott
Icahn
Acquire the company Shorting
Pershing
Spin or divest assets
Elliott JANA
Third Point
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The Activist’s Agenda – Recent Examples in Europe Issuer/ Listing
“Activist” Shareholder
Activist Agenda/Aim
Outcome
2014 Leaf Clean Energy (UK)
Crystal Amber
Restructure board and adopt restructuring strategy
Two board members resigned and Activist’s nominees appointed
bwin.party digital entertainment (UK)
Cumberland Associates
Restructuring divestiture of non-core assets
Ongoing. Activist has acquired board seat
F&C Asset Management (UK)
Elliott Management
Merger arbitrage to increase takeover offer price
Takeover offer price at the original offer price approved by shareholders
WM Morrison (UK)
Elliott Management
Restructure property portfolio to release value
Ongoing
First Group (UK)
Sandell Asset Management
Alternative turnaround plan and restructuring
Ongoing
Essar Energy (UK)
Standard Life
Increase takeover offer price
Ongoing
Porsche (Germany)
23 Hedge Funds including: (i) Viking Global Investors (ii) Glenhill Capital
Litigation in connection with attempted takeover of Volkswagen
Claim for €1.36bn rejected. Other claims ongoing
ThyssenKrupp
Cevian
Restructuring and divestiture of assets
Issuer agreed to consider restructuring and divestiture options
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The Activist’s Agenda – Recent Examples in Europe (cont.) Issuer
“Activist” Shareholder
Activist Aim/Agenda
Outcome
2013 Gulf Keystone Petroleum
M&G Recovery Fund
Restructure board and reduce board remuneration
Issuer reached agreement with Activist
Hibu
Hibu Shareholders Group
Restructure board and oppose lenders’ restructuring plan
Unsuccessful. Issuer placed into Administration
Bumi
Nathaniel Rothschild
Restructure board and alternative group restructuring
Unsuccessful.
EADS
The Children’s Investment Fund
Sale of 46% stake in Dassault Aviation to return value to shareholders
Unsuccessful but Activist achieved a reported 90% return on investment
Transocean
Icahn Associates
Increase dividend payout and restructure board
Initially unsuccessful – other shareholders voted against proposals. Issuer reached agreement with Activist 9 months after proxy fight
Telecom Italia
Findim Group
Restructure board
First proposal rejected by shareholders. Activist continuing with Agenda. Ongoing
Rangers International F.C.
Laxey Partners
Support existing board
Successful. Ongoing
Celesio
Elliott Management
Merger arbitrage to increase takeover offer price
Successful. Price increased
UBS
Knight Vinke
Disposal of investment banking arm
Ongoing
Kabel Deutschland
Elliott Management
Merger arbitrage to increase takeover offer price
Successful. Price increased
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The “New Dialogue” – and How it Differs (US vs Europe) What are we seeing from the Activists?
More Campaigns
US • • • •
More Activists
• • •
•
UK/Europe
Sustained levels of campaigns and proxy fights More AUM = more $$ “seeking a home” Broader universe of viable targets: large caps, expensive stocks, star performers…all viable Expensive companies are also viable targets
•
Emergence of new entrants to the strategy Trained portfolio managers from large funds have launched their own vehicles (Corvex, Marcato) New wave of portfolio managers targeting small and mid-caps Quiet support from long only investors …RFA …
• •
•
• • •
Increase of circa 3.5% in 2013 compared to 2012. Q1 2014 has seen a significant number of UK campaigns
Activism remains contained Increased credibility and changing perception of activists US players entered the market Long only and collective shareholder groups increasingly involved Launch of a few new entrants
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The “New Dialogue” – and How it Differs (US vs Europe) What are we seeing from the Activists?
US
UK/Europe
Increased Allocation to Activist Funds
•
Increased allocation of monies by state pension funds and similar to activist funds
•
Increased allocation of monies by county councils and Church of England to activist funds
Targets are Larger … and Smaller
• •
Size of the issuer no longer relevance Successes…despite no chance of taking control New entrants focused on small to middle market
•
There are more and more examples of FTSE 100 companies coming under attack Underperforming companies in the FTSE 250 remain targeted
Diversification of Tone
•
Styles range from constructive to acrimonious Willingness to work with management Willingness (by some) to participate on boards and sacrifice liquidity The threat of public attack remains relevant
• • •
•
• • •
•
•
Private dialogue the norm Tone historically softer Approach has been to appeal (with increasing levels of firmness) to common law and statutory duties of directors and fiduciary obligations Trajectory likely to be increasingly aggressive 11
The “New Dialogue” – and How it Differs (US vs Europe) What are we seeing from Issuers?
US Management teams keenly aware of the threat Boards evaluating areas of vulnerability…in advance “Off the shelf” responses In some cases, pro-active corporate action pre-empts an activist attack
•
“More of a widespread acceptance of the policy changes that so-called activists are trying to effect” (Mary Jo White, Head of the SEC)
•
UK boards appreciate the benefit of engaging with activists by demonstrating an openness at least in initial stages when discussions are in private
More Receptive to • Powerful tool…more activists seeking to effect agenda through direct Board & Higher Quality representation or appointees Board • Higher quality of candidates proposed Representation
•
More NEDs are willing to work with activists Higher quality/ broader pool of candidates
Companies are Better Prepared
•
UK/Europe
• • •
Willingness to Engage and/or Listen
•
•
•
•
Some UK companies have started to take steps to prepare in advance of activist attacks In particular: financial and governance reviews to identify areas of weakness and vulnerability
High number of settlements admitting activist appointees to the Board – typically a “must” for settlement
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The “New Dialogue” – Other UK & EU Drivers REGULATORY PRESSURES & INCREASED ENGAGEMENT • Governmental encouragement to engage (Stewardship Code 2010; Revised 2012) • Major industry associations are also encouraging intervention and engagement: – Association of British Insurers (ABI): Improving Corporate Governance and Shareholder Engagement (July 2013)
– The National Association of Pension Funds (NAPF): Corporate Governance Policy and Voting Guidelines (November 2013)
– Institutional Shareholders’ Committee (ISC): (i) Statement of Principles on the Responsibilities of Institutional Shareholders and Agents (2002); (ii) Code on the Responsibilities of Institutional Investors (2009)
– The Institute of Chartered Secretaries and Administrators (ICSA): Enhancing Stewardship Dialogue (March 2013)
• •
– Hedge Fund Working Group (HFWG): Statement of Principles (2008) More engagement by smaller retail shareholder associations e.g. UK Shareholders Association, ShareSoc Many large institutional investors (e.g. BlackRock, L&G, T Rowe Price, Vanguard) have developed “active” substantial corporate governance teams 13
The “New Dialogue” – Other UK & EU Drivers INCREASED ENGAGEMENT, NEW GROUPS, REGULATORY CLARITY • Increasing importance and use of proxy advisors - ISS, Glass Lewis, PIRC, Manifest, ABI • Increasing importance and engagement by professional engagement firms - Hermes EOS, F&C’s Responsible Engagement Overlay (reo®) Services, RobecoSAM, Governance for Owners (GO) • Important lobby groups e.g. Share Action, Greenpeace, Alliance for Water Stewardship • Emergence of new collection engagement groups – Investor Forum for Collective Engagement, Shareholder-Director Exchange • Regulators have aided collective engagement (formal or ad hoc) by action groups through clarifying the rules on concerted parties and related issues (market abuse, disclosures) – UK Panel on Takeovers and Mergers: Practice Statement 26 – ESMA “White List” of Activities (December 2013) – Engagement Action Groups to be formed by Investor Forum and seek pre-clearance from UK Takeover Panel (from June 2014) 14
Activist Campaign Strategies & Points of Note Strategy Building a “Relevant” Stake & “Dawn Raids”
Points of Note/ Relevant Questions for Activists & Issuers • • •
The Approach … Activist At the Door
• • • •
How do activists acquire their stakes? - Equity v Debt? - Direct holdings, CFDs, derivatives How much is “enough”? Differences in disclosure in US and Europe can impact strategy • US: Delayed disclosure - ability time stake building to delay public disclosure of position. However13D filings require disclosure of purpose of acquisition (5% />) • Europe: DTRs - disclosure starting at 5% and in four trading days. Some member states (e.g. UK) have tighter requirements. Enhanced disclosure during an “offer period” (1%; extends to derivatives). No mandatory disclosure of intention. Is there any benefit to engaging privately with issuers? What should issuers expect? What should an issuer do? Engage or not ? What does the initial approach usually entail? Governance structures drive differences in the approach in US, UK, EU • US: Communication lines opened with IR. Dialogue commences with management team • UK: Good/better access to Chairman and SID and/or Rem Com head • Europe: Need to take account of dual board structures 15
Activist Campaign Strategies & Points of Note Strategy Pressing the Public “Play” Button
Points of Note/ Relevant Questions for Activists & Issuers •
•
• • •
•
When does the activist “go public”? - Does the activist want to admit that their private dialogue has effectively failed? - Disclosures of significant holdings in the issuer can commence the public debate? What happens when the activist goes public? - Once there is a public dispute, tone can degrade … rapidly - Acrimonious personal accusations (bad judgement, cronyism, entrenchment, even fraud)…all fair game What tools are used? - Publishing open letters, white papers, press releases - Setting out detailed arguments in shareholder circulars When should the issuer respond publicly? US: Activists more willing to make their arguments public to persuade other stakeholders and constituents. Public campaigns are often far reaching and extensive - press releases, investor presentations, white papers, media warfare UK/Europe: Fewer public appeals … but this is seeing an increase. Public campaigns are not as “sophisticated” and extensive as US campaigns (e.g. use of white papers). This is changing particularly where US activists are involved. Tone is also changing.
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Activist Campaign Strategies & Points of Note (cont.) Strategy Media Warfare
Points of Note/ Relevant Questions for Activists & Issuers •
• • • • • Assessing Shareholder Sentiment & Garnering Support
• • • • •
Activists are willing to use all types of media tools but not all are appropriate for issuers What are the most effective media tools? Essential for activist and issuer to have regular contact with media (pre and during campaign) Social media: When is Twitter used by activists? Should an issuer ever use Twitter? Use of other media - broad sheet advertisements, website campaigns, investor presentations, investor open days? What are the key tips for issuers? Activist starts ‘soft’ pre-campaign testing on public disclosure of interest in issuer Once proposals are public, more active engagement with shareholders commences to identify like-minded supporters or opposition and to gather intelligence to refine and develop proposals Issuer should in parallel engage with shareholders to gauge their reaction to activist proposals. Is there any need to lobby long-standing shareholders for support? What are the risks in and issues to be aware of when canvassing shareholder support? Is there a difference of approach in the US and Europe? Why?
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Activist Campaign Strategies & Points of Note (cont.) Strategy Engaging With Other Stakeholders
Using Minority Shareholder Rights
Points of Note/ Relevant Questions for Activists & Issuers •
Well prepared activists seek input or support from relevant agencies and other stakeholders e.g.: (i) bondholders (i) credit rating agencies (iii) analysts (iv) pension trustees (v) anti-trust regulators (vi) proxy advisors and (vii) trade unions Objective: To identify key issues which may impact proposals
•
Well prepared issuers should undertake similar analysis and reconnaissance both within the company and externally. In addition, issuers should reach out to other stakeholders e.g.: (i) employees (ii) option holders (iii) customers (iv) employees Objective: To manage potential damage from activist campaign
•
Activist will utilise minority rights to achieve objectives e.g.: (i) attend/speak/ vote at general meetings (in person or by proxy) (ii) inspect and request copy of shareholder register (iii) requisition resolution at issuer AGM (iv) require circulation of 1,000 word statement (v) require independent scrutiny of poll vote
• How can and should the issuer react to these initiatives? (i) Check compliance with by-laws and company law requirements e.g. confirmation of persons with relevant interests to exercise shareholder rights; compliance with statutory deadlines; satisfaction of proper purpose test to inspect register (ii) Use statutory rights to identify beneficial holders (e.g. UK – section 793 notices) (iii) Strict control and checks at general meeting of proxies, corporate representatives (iv) At the general meeting, allow debate and questions … ensure a fair hearing 18
Activist Campaign Strategies & Points of Note (cont.) Strategy Requisitioning General Meetings
Points of Note/ Relevant Questions for Activists & Issuers • • • • •
Gathering Formal Shareholder Support
•
•
When will the activist requisition a general meeting? How commonplace are meetings used to challenge by-laws, expedite corporate change … in the US … Europe? What kind of resolutions will the activist propose? What is the objective of a mere advisory vote? Should issuers ignore them? What are the different types of formal support that an activist will seek? - Consent to use name in discussions with issuer - Satisfy statutory requirements for minimum voting shares to requisition meeting or utilise other shareholder rights - Undertaking to vote in favour of a resolution or block issuer resolution(s) How can the issuer respond? - Also consider obtaining voting undertakings to block or support - Consider if possible to restructure transaction to avoid or change voting requirements for shareholder support needed to succeed - Monitor activist and supporters behaviour and shareholdings – are parties acting in concert? Should interests have been disclosed collectively? is there any evidence of market abuse or abusive conduct?
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Activist Campaign Strategies & Points of Note (cont.) Strategy Getting the Votes In
Points of Note/ Relevant Questions for Activists & Issuers • •
• • • Litigation
• • • •
Significant resources and preparation required in advance to gather votes in Initial analysis required of shareholder registers to determine most appropriate tools for solicitation How long does it take to get people to vote at meetings? What is the typical voting “leakage”? How important is the support of ISS and Glass Lewis? Do they only matter in US campaigns? Who matters in the UK and Europe? How often is litigation used as a tool by the activist? Is there any perceptible difference between the US and Europe? Are there differences within Europe? Recent examples • US - Sothebys v Third Point • Europe – Porsche
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Issuers – Advance Preparation & Protection •
Pre-emptive Governance Initiatives: Identify weaknesses in structure, governance and remuneration and in all cases deviations from industry best practices and guidelines Effect changes or be prepared to defend existing structures
•
Rigorously and Periodically Review All Alternatives: Board should be familiar with the full range of alternatives and strategic options The Board should be prepared to address any reasonable activist agenda and defend the road taken or not taken. Use internal resources (e.g. SID) to run “mock challenges” to the Board or senior management
•
Know Your Investors: Monitor registers, track voting records, track who is following proxy or governance advisers and engage in regular dialogues with shareholders (to gauge vulnerabilities, listen for concerns, understand views on governance and strategic issues) Too often issuers are taken by surprise by shareholder discontent 21
Issuers - Preparation & Protection Once Its ‘Kicked Off’ •
Initiate Rigorous Internal Protocol: Establish communication lines to board or senior management, establish a working group (legal, PR, proxy, independent financial adviser, brokers, registrar), establish protocol for engagement with media Preparation makes all the difference; staying nimble and flexible is key
•
Know Your Activist & Their Agenda : Who is the activist? Are they respected? Do they have a following? What is their track record and modus operandi with other issuers? What are their direct and indirect holdings in the company? When did they acquire their stake(s)? Do you really understand their agenda? What is credible and accurate? What isn’t? Does the agenda generate more value than a standalone plan? Do not make assumptions about the campaign in hand or underestimate depth of analysis undertaken by activist
•
Plan a Response Strategy & Plan: Develop a response plan, consider risks of settlement, offering a board seat and implementation of appropriate elements of activist’s proposals, consider if the campaign will bring others, evaluate legal remedies Remember … pacification may protect the issuer … but for how long … who next? 22
What Matters to the Activist •
•
Key Concerns – Failure of agenda and potential equity downside – Risk of becoming an insider – Forming a concert party and/or triggering a mandatory bid (EU specific issue) – Cost benefit analysis of an expensive campaign – Reputation – Building up a successful track record Other Issues/ Concerns – Reputational issues for the “novice activist” or the new market entrant – Defective proposals due to poor preparation and/or reliance on public information and missing the “big” issue – Triggering control or disclosure levels inadvertently – Triggering anti-trust / merger control issues – Staying off the radar screen of the regulators 23
Top Tips for Issuers •
Try to identify issues in advance - Consider steps can be taken to head off an attack e.g.: distribute excess cash or dispose on assets that do not fit with strategy Preparation is key
•
Try to keep dialogue private - Remember the activist wants the share price to increase, not necessarily a public, costly fight Retain the moral high ground
•
Stay in front of your long shareholders with your strategy and why it makes sense - Do not wait for a proxy fight or activist attack to make your case It’s good to talk
•
Prepare the board for what is coming - Consider the possibility of cutting a deal, putting one representative on the board as early as possible Retain flexibility 24
APPENDICES
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APPENDIX 1– ACTIVIST AGENDAS & STRATEGIES
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Appendix 1 – List of Activist Agenda & Strategies •
• •
•
•
Management and Board changes: – New “blood” and/or added expertise at board and/or management level, management issues and related structural governance issues Remuneration: – Say on pay in the context of global regulatory developments and best practices Unlocking Shareholder Value: – Return of capital to shareholders through buy-backs or dividends; leveraged recapitalisations; refinancing of debt Strategic or Operational Tuning: – Business re-focussing; changing operational model (e.g. sale and lease backs); decreasing overheads Transaction Specific: – Requiring company to divest or spin-off a failing business or asset; undertake a specific acquisition 27
Appendix 1 – List of Activist Agenda & Strategies (cont.) •
•
•
•
•
Event-Driven: – Seeking to direct the outcome of a current transaction (takeover), “bumpitrage” Total Exit: – Requiring company to put itself up for sale and realise a premium. Activists themselves may solicit buyers Buy Out: – Some activists (e.g. Icahn and Elliott) are prepared to launch hostile bid for targets, whether alone or in a consortium Entering into short selling positions: – Activists may short their stocks and launch a parallel campaign to discredit company Litigation & Regulatory Actions: – Threaten or take legal action (derivative actions, claim of breach of directors’ duties or claim of unfair prejudice against activist as a minority shareholder) – Encourage intervention by regulators, initiate complaints about regulatory or other breaches 28
APPENDIX 2 – KEY DATA ON KEY ACTIVISTS
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Appendix 2 – Who Are the Key Activists in UK and Europe? Activist
Key Principal(s)/Founder
AUM
Location
Targets
Audley Capital
Julian Treger
No public information
London
Anglo Pacific Group, Western Coal
Breeden
Richard Breeden
US$219m Oct 2013
Connecticut
Zale Corp
Bristol Capital Advisors
Paul Kessler
No public information
Los Angeles
Miller Energy Resources
Cevian Capital
Christer Gardell and Lars Förberg
€8.5bn
London
ThyssenKrupp, Volvo
Clinton Group
George E. Hall
US$1.5bn (Feb 2014)
New York
The Wet Seal Inc, Nutrisystem, ValueVision
Coppersmith Capital
Jerome Lande
No public information
New York
ConMed, Alere Inc
Corvex
Keith Meister
US$5bn Feb 2014
New York
Williams Companies, Fidelity National Financial, Commonwealth REIT, TW telecom, Signet Jewlers,ADT Corporation, Ralcorp, AboveNet, Corrections Corporation of America
Crystal Amber Asset Management
Richard Bernstein, Jonathan Marsh
UK£164.4m (NAV) Feb 2014
Guernsey
API Group, Sutton Harbour Holdings, TT Electonics, Leaf Clean Energy , Thorntons
Cumberland Associates
Andrew Wallach
US$156m Oct 2013
New York
bwin.party#
Davis Selected Advisors
Christopher Davis
US$43.1bn Oct 2013
New York
American Express, Google, Bank of New York Mellon
Dialectic
John Fichthorn, Luke Fichthorn
US$2.03bn Oct 2013
New York
Immersion Corporation, AT&T
Elliott Management Corp
Paul Elliott Singer
US$32bn Oct 2013
New York
Juniper Networks, Riverbed Technology, NetApp, Hess, BMC Software, Compuware, Brocade Communications, National Express #, WM Morrison #
Eminence Capital
Ricky Sandler
US$6.61bn Oct 2013
New York
The Mens Warehouse, eBay, Cognizant Technology
Engaged Capital
Glenn Welling
US$22bn Feb 2014
California
Abercrombie & Fitch, Rentech, Volcano Corp
* - Long Investors # - UK/ EU targets of non-EU activists
Appendix 2 – Who Are the Key Activists in UK and Europe? (cont.) Activist
Key Principal(s)/Founder
AUM
Location
Targets
Franklin Mutual Advisers
Peter Langerman
US$59bn Oct 2013
New Jersey
Dell, Tribune Co, Assicurazioni Generali#
Glenhill Capital
Glenn Krevlin
US$1.18bn Oct 2013
New York
FedEx, Motorola, Starwood Properties
GVO Investment Management (formerly SVG Investment Managers)
Adam Steiner
UK£1.25bn Jan 2014
London
Aberdeen Asset Management, Wills Group Holdings, EV2 Technologies plc, CVS Group, Goals Soccer Centres
Harwood Capital
Christopher Mills
US$974m Oct 2013
London
Cyprotex, Active Risk Group, Goals Soccer Centres
Icahn Associates
Carl Icahn
US$30,456m Feb 2014
New York
Hologic, Talisman Energy, Dell, Nuance, Forest Laboratories, Transocean, Apple, Herbalife, Oshkosh, Enzon Pharmaceuticals, The Greenbrier Companies, Netflix, Navistar, Broadview Networks, Mentor Graphics, Chesapeake Energy, CVR Energy, Amylin Pharmaceuticals, Clorox
Jana Partners
Barry Rosenstein
US$5.46bn Oct 2013
New York
QEP Resources, Outerwall, Safeway, Oil States, Ashland, Agrium, Marathon Petroleum
JEC Capital Partners
Peter Heiland
Massachusetts
Ithaca Energy#, Miranda Technologies Inc
JCP Investment Management
James Pappas
US$18.3m Oct 2013
Houston
The Pantry Inc, Morgans Food, Samex Mining Corp
Knight Vinke Asset Management
Eric Knight
US$1.33bn Oct 2013
New York
Darty Group (formerly Kesa) #, UBS#
Laxey Partners
Andrew Pegge, Colin Kingsnorth
US$159m Oct 2013
Isle of Man
Rangers International Football Club,
Lone Star Value Management
Jeff Eberwein
US$698m Dec 2013
Connecticut
The Pantry Inc, Miller Energy Resources, Rentech
M&G Recovery Fund *
Tom Dobell
UK£7.2bn Feb 2014
UK
Gulf Keystone Petroleum
Odey Asset Management
Crispin Odey
US$11.1bn Feb 2014
London
Rockhopper Exploration,
Paulson & Co
John Paulson
US$27.4bn Oct 2013
New York
Family Dollar Store, Grifols SA, Harfords, Deutsche Telekom #
* - Long Investors # - UK/ EU targets of non-EU activists
Appendix 2 – Who Are the Key Activists in UK and Europe? (cont.) Activist
Key Principal(s)/Founder
AUM
Location
Target
Pershing Square
Bill Ackman
US$13.2bn Oct 2013
New York
J.C. Penney, Air Products, Herbalife, Procter & Gamble, Canadian Pacific Railway
Relational Investors
Ralph Whitworth
US$5.3bn Oct 2013
San Diego
Hologic, Hess, Timken, SPX, Flowserve, Esterline, PMCSierra, Illinois ToolWorks, Par Pharmaceuticals
RWC Partners
Paul Harrison, Nigel Davis, Philip Harris (UK); Maarten Wildschut, Petteri Soininen (EU)
US$6.4bn Sept 2013
London
Grontmij. Vodafone, Siemens (formerly Hermes Focus Asset Management)
Sandell Asset Management
Tom Sandell
US$497m Dec 2013
New York
First Group#, Bob Evans, F&C Management#,
Sherborne Investors
Edward Bramson
US$573m Oct 2013
New York
3i#, F&C Management#, Electra Private Equity
Standard Life Investments*
Keith Skeoch
UK£184.1bn Dec 2013
Edinburgh
Essar Energy, RSA Insurance, Persimmon, Glencore
Starboard Value
Jeff Smith
US$1.64bn Oct 2013
New York
Darden Restaurants, TriQuint Semiconductor, Smithfield Foods, Emulex, Office Depot, DSP Corp, Calgon Carbon, Wausau Paper, Quantum, Integrated Device Technology, AOL, Progress Software, Avid Technology, Tessera
The Children’s Investment Fund
Chris Hohn
US$6,860mm
London
Airbus Group (formerly EADS), Newscorp, Royal Mail#
Third Point Partners
Daniel S. Loeb
US$14.5bn March 2014
New York
Dow Chemical, Sotheby’s, CF Industries, Sony (Japan), Murphy Oil, Yahoo!
Trian Fund Management
Nelson Peltz, Peter May, Ed Garden
US$5.93bn Dec 2013
New York
Mondelēz, PepsiCo, Danone (France), Ingersoll–Rand
Value Act Capital Management
Jeff Ubben, Mason Morfit, George Hamel Jr
US$11bn Oct 2013
San Francisco
Wills Group Holdings#, Microsoft
US$28.5bn Oct 2013
Connecticut
Porsche SE#, Canadian Pacific Railway, Facebook, Valero Corporation
US$2.5bn Dec 2013
Toronto
Longreach Oil and Gas,
Viking Global Investors West Face Capital
* - Long Investors
Greg Boland
# - UK/ EU targets of non-EU activists
APPENDIX 3 – STATE PENSION FUNDS AND ACTIVIST INVESTMENT ALLOCATIONS
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Appendix 3 - State Pension Funds and their Activist Investments Pension Fund
Blue Blum Breeden Breeden Cartica Harbour Capital Partners Europ. Capital Partners
CalPERS CalSTRS
Pension Fund
$500m+
$500m
$250m
$300m
$200m
Breeden Partners
Cartica Capital
$300m (Exited)
Sandell
G4O
Hermes
Knight Vinke
$200m
$300m+
Exited
$300m+
X
$350m
Elliott
G4O
$100m
$200m
Hermes
Alaska Retirement Management Board State of Wisconsin Investment Board
Lazard Legion New Relational Korea Partners Mountain Investors Corp Gov
X
X
X
Taconic
X
X X X
Exited
X X
Nottinghamshire County Council Pension
X X
X
X
University of Texas Inv Mgt Company
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$1,300 m
X
North Carolina Department of State Treasurer
The Church of England
$500m
X
Mason New Pershing Relationa Starboard Stinson Capital Mountain Square l Value Investors X
LA County Employees Retirement Association
West Yorkshire Pension Fund
X
X
Hampshire Pension Fund
West Midlands Pension Fund
$1,300 m
$150m
Devon County Council
Public Employees Retirement New Mexico
$200m+
X
Philadelphia Board of Pensions and Retirement
Maryland State Retirement and Pension System
Shamrock Sparx Value Creation Fund
X X
X X
X
X X The Church of England does not disclose which Hedge Funds it invests with, but announced earlier this month that it will be increasing its allocation to such funds from April 2014
Appendix 3 - State Pension Funds and their Activist Investments Pension Fund
Cevian Elliott Glenview Healthcor Jana Capital Capital Partners
State of New Jersey Dpt of the Treasury
$150m
CPP Investment Board
X
University of California Retirement Plan
X
Office of the New York State Comptroller
X
Texas County and District Retirement System
$200 m
$100m
Florida State Board of Administration Fire and Police Pension Association of Colorado
P2 Capital
$100m
$100m
Exited
X
$50m
$75m
Third Point
Trian ValueAct Highfield Partners Capital Capital
$100m
$150m
Wexford Spectrum
X
$40m X
X $100m n
Pershing Starboard Taconic Square Value
X
Teachers Retirement System of Texas School Employees Ret System of Ohio
Knight Vinke
X
$18m
X
X
X
X X
X
$100m
$125m
X X
X
X
$30m
School Employee Ret Sys of Missouri
X
Missouri State Employee Retirement System
X
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Q&A
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36
Gibson Dunn & Crutcher More than 1,100 lawyers in 18 offices in leading business centres worldwide. Beijing • Brussels • Century City • Dallas • Denver • Dubai • Hong Kong London • Los Angeles • Munich • New York • Orange County • Palo Alto Paris • San Francisco • São Paulo • Singapore • Washington, D.C.
Our Hostile M&A and Shareholder Activism Practice •
Gibson Dunn has developed a premier practice in representing companies and investors in connection with all forms of shareholder activism, including efforts to implement special interest shareholder proposals, seek board representation, de-stagger board composition and weaken antitakeover defences. In the US, we have recently represented many Fortune 500 and other companies in responding to shareholder activism and have represented many of the largest companies in successfully negotiating non-public resolutions with the largest and best-known activist investors. In the UK, representations have included recent high profile activist cases involving FTSE 250 companies such as Asian Resources Minerals (formerly Bumi plc) and First Group.
•
In activist situations we integrate our Firm’s expertise in securities regulation and corporate governance, M&A and litigation to bring targeted solutions to each of our clients. Our multidisciplinary approach enables us to explore a full range of options for each activist situation, including potential regulatory and litigation remedies, aggressive proxy contests, or quick and effective engagement, if appropriate.
•
We also advise clients on an array of corporate governance-related matters that impact shareholder activism, including board composition, procedures and responsibilities of boards and committees, analysis of director independence issues, fiduciary duty issues and D&O indemnification and insurance issues. We draw on our extensive experience in corporate governance matters to provide advice that integrates both current best practices and practical judgments to address complex situations that pose regulatory and liability risks. Our lawyers are active in developing and reviewing governance policies and have developed expertise in preparing and tailoring the key governance documents responsive to the needs of our clients.
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The Georgeson Story PROVIDES CERTAINTY That you will achieve the best possible result
ID & ANALYSIS Identifying the beneficial owners and investment managers who are investing in your stock
CORPORATE GOVERANACE ADVISORY Agenda Analysis and Proxy Advisor Risk Analysis (PARA)
VITAL INVESTOR INTELLIGENCE Enabling you to adapt your strategy and neutralise dissent
DRIVE PARTICIPATION By engaging in direct dialogue with the proper voting authorities
ACHIEVE YOUR DESIRED GOALS Proactively monitoring proxy instructions
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Moelis & Company Overview SECTOR EXPERTISE
HIGHLIGHTS
Global independent investment bank established in 2007 600 employees located in 14 offices in the United States, Europe, the Middle East, Asia and Australia Investment banking capabilities include mergers & acquisitions, recapitalizations & restructurings, capital markets and risk advisory Named Most Innovative Independent Investment Bank by The Banker in 2013, 2011 and 2010 Leading independent defense advisor
Aerospace & Defense
Automotive & Transportation
Chemicals
Consumer, Retail & Restaurants
Energy, Power & Infrastructure
Financial Institutions
Financial Sponsors
Healthcare
Homebuilding & Building Products
Hotels & Gaming
Media & Broadcasting
Metals & Mining
Paper, Packaging & Forest Products
Public Sector
Real Estate
Technology & Telecom
Multiple situations working with issuers representing dissident shareholders SELECT TRANSACTIONS
$61.2bn Sale to Inbev
$24.9bn Restructuring of Dubai World
$42.0bn Sale to Discover and associated asset sales to Sallie Mae and Citi
$15.7bn Sale to Thermo Fisher Scientific
€30.0bn+ Disposal of most of its complex credit derivative portfolio
$10.7bn Sale to IntercontinentalExchange, Inc.
$35.1bn Merger with Publicis Groupe
$9.4bn US asset sale to The Blackstone Group A$5.0bn Merger of Australian Interests A$4.3bn Restructuring
$29.6bn Chapter 11 Reorganization $17.0bn Merger with US Airways Group
€4.1bn Restructuring
$28bn Sale to Berkshire Hathaway and 3G Capital
¥278.4bn Combination with the Tokyo Stock Exchange
$26.5bn Sale to The Blackstone Group
$2.2bn Senior dividend and notes offering
Inc.
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Bell Pottinger
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MCLE Certification Information •
Most participants should anticipate receiving their certificate of attendance in 3 to 4 weeks following the webcast.
•
Virginia Bar members should anticipate receiving their certificate of attendance in 6 weeks following the webcast.
•
Questions regarding MCLE information should be directed to Jeanine McKeown (National Training Administrator) at 213-229-7140 or
[email protected]
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