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Activist Insight’S Josh Black on a Busy Year for Activism 2015 ACTIVIST INVESTING An annual review of trends in shareholder activism In association with World’s largest dedicated chemicals investment banking team. Independent strategic financial advice to public company managements and boards of directors. Chemicals investment banking. That’s all we do. New York | London treet www.valencegroup.com Editor’s foreword Activist Insight’s Josh Black on a busy year for activism ctivists capitalized on decisive shift from spoiler campaigns targeted stocks and investors in their growing prominence, in 2013—where activists sought to activist funds, while we have also A popularity and firepower in derail unattractive takeovers—to one added PDF download functionality. 2014. How else to explain a year in in which companies were encouraged We have spoken at conferences in which Darden Restaurants’ entire to sell themselves or make London, Toronto and New York and board was removed, eBay agreed acquisitions. While private equity continue to be an important resource to spin-off PayPal and Allergan sold continued to appear subdued, both for the mainstream media. itself for $66 billion? The statistics PetSmart and Riverbed Technology contained within this report show fell to large leveraged buyouts. It is a delight to be partnering, once those campaigns were not isolated again, with Schulte Roth & Zabel for incidents. More activists targeted More activists this Annual Review. Their insight into more companies than ever before, targeted more activism on two continents is highly particularly in the US, while finding companies valuable to our news team, and we that their demands were increasingly than ever are glad to bring you a selection of accepted. The healthy M&A market before” their observations from 2014 and meant a greater range of outcomes predictions for the year ahead. became possible, and activists used One arena in which activism had a Our other contributing advertisers, this to their advantage. “quiet year was Europe. Major targets Innisfree M&A, Houlihan Lokey, like Bwin and FirstGroup saw their Georgeson and APB Financial Group, Last year, I made the following stock fall after confrontations with US also have many interesting insights in hostage-to-fortune predictions: “A slow activists, while Sherborne Investors their editorials. M&A environment in 2013 and record lost its proxy contest at Electra Private levels of corporate cash helped Equity (but won the strategic review it Great thanks are due to all buybacks and dividends become a called for). This was not the year to subscribers and advertisers, across popular strategy. Next year could prove that long-only activism can take both products, contributors to this see shareholders more bullish about root in Europe, and many companies Annual Review and Activism Monthly obtaining a premium from a third party have begun to worry instead about Premium, and those who have takeover, while increasing confidence short-selling campaigns—on which invited us to address conferences, in the mood of institutional investors we have added considerable data to throughout 2014. In 2015, we will could lead to more majority slates in Activist Insight Online. continue to expand our database and proxy contests.” shine a light on under-appreciated This year has been a tremendous facets of activism through our In fact, balance-sheet campaigns fell one for Activist Insight. We have magazine, while you can expect to back to 2010-12 levels as a proportion completed a year’s run of our see us at more and more events. of all activism, majority slates were print magazine, Activism Monthly nominated at bigger companies Premium, which features interviews, I hope you find this resource of great and proved highly successful, and key trends and conference reviews. use in your work within this exciting M&A became one of the themes of Data added to our online product field. We certainly look forward to the year. In particular, there was a includes ownership for activist- working with you again in 2015. 3 Contents The Activist Insight Activist Investing Review 2015, in association with Schulte Roth & Zabel 3 Editor’s foreword Josh Black, Activist Insight 14 28 5 The era of activism Marc Weingarten & David E. Rosewater, Schulte Roth & Zabel 6 A watershed year Arthur Crozier, Innisfree M&A 8 Taking care of business 14 Activist top ten 20 Activism: the real estate angle Houlihan Lokey 8 22 2014 in numbers 24 Leading the pack Marc Weingarten & David E. Rosewater, Schulte Roth & Zabel 26 Collaborative activism Steven Abernathy & Brian Luster, APB Financial 28 Campaigns of 2014 34 Britain: where are the activists? Cas Sydorowitz, Georgeson 5 34 36 Voting intelligence Nick Dawson, Proxy Insight 38 Who backed activists in 2014? 40 Activists’ performance starts to slip 42 Shareholder proposals All rights reserved. The entire contents of The Activist MANAGING EDITOR: this report. We welcome contributions and insights from Insight Activist Investing Review 2015 are the Copyright Josh Black those working in the field of activism and are delighted to of Activist Insight Limited. No part of this publication may have such esteemed columnists. For more information, be reproduced without the express prior written approval ACTIVIST INSIGHT CONTRIBUTORS: please email Josh Black at [email protected]. of an authorized member of the staff of Activist Insight Nick Arnott, Kerry Pogue, Limited, and, where permission for online publication is Adam Riches, James Martin, Husein Bektic, Adrian PUBLISHED BY: granted, contain a hyperlink to the publication. Gilbert, Daniel Davis Activist Insight Limited 26 York Street, London, W1U 6PZ The information presented herein is for information WITH SPECIAL THANKS TO: +44 (0) 207 129 1314 purposes only and does not constitute and should Marc Weingarten and David E. Rosewater at Schulte Roth not be construed as a solicitation or other offer, or & Zabel LLP www.activistinsight.com recommendation to acquire or dispose of any investment [email protected] or to engage in any other transaction, or as advice of any Activist Insight wishes to thank all contributors and those Twitter: @ActivistInsight nature whatsoever. who made themselves available to be interviewed for Image credits: (All images provided by Shutterstock) p14, Yahoo!: Katherine Welles; p15, Walgreens: dcwcreations; p16, PayPal: nevodka; p17, Vodafone: Radu Bercan; p31, Darden: ljh images; p32, PetSmart: Rob Wilson The era of activism Schulte Roth & Zabel Partners Marc Weingarten and David E. Rosewater, Co-heads of the firm’s global shareholder activism practice, on what to expect in 2015 ith the number of players elect at least a majority of the board. have been left in the wake. These and available capital in the Prior to 2012, such campaigns were opportunities have continued to W activism market reaching very rare. However, in the past two fuel interest in activism by both new heights, Schulte Roth & Zabel’s years, almost one-third of proxy European and US funds. US-based global shareholder activism practice contests have seen majority slates activists such as Carl Icahn, GAMCO has found itself at the epicenter of nominated, according to data Investors, Elliott Management, an undeniable activism boom. In the gathered by Activist Insight. There Sandell Asset Management and continuation of a trend several years has also been a notable increase in SpringOwl Asset Management have in the making, assets under activists’ the number of full slates of board looked to European opportunities. management topped $150 billion in members put forward by activists in 2014, sharply up on previous years. recent years. We expect that over time this trend will continue to build, and despite Activism bulks up There is no cultural variances, shareholders reason to on both sides of the Atlantic share Notably in 2014, the expansion of expect activism common objectives. A large appetite activists’ capital allowed them to to slow in the in the activism market should lead to pursue iconic companies with multi- year ahead” continued growth, particularly in the billion-dollar market capitalizations, United Kingdom. including giants such as Apple ($654 billion), PepsiCo ($145 billion), Amgen “Some of the most highly publicized What to expect for 2015 ($120 billion), Walgreens ($72 billion), situations of the last year involved DuPont ($67 billion), Allergan ($65 such contests, including companies Thanks in part to the marked upswing billion), Yahoo! ($45 billion), Bank of such as Bob Evans Farms, Darden in the number of activism campaigns New York Mellon ($43 billion) and Restaurants, Equity Commonwealth in 2014, there is no reason to expect Hertz Global Holdings ($10 billion). and Cliffs Natural Resources. As a activism to slow in the year ahead. In We see no signs of the flow of assets tactic, companies have attempted fact, the area continues to grow and, into activist funds abating; in a to battle this trend by leaving empty bolstered by a steadily increasing separate study we conducted earlier spots on their slates to be claimed by flow of capital, is expected to this year, more than half of activist activist nominees—with the intention intensify. Tactics used by companies fund managers surveyed expected of encouraging unhappy shareholders and activists will continue to be the increase in activism through to vote with the remainder of the adapted, and we may even see less 2015 to be “substantial.” company’s nominees. However, this of companies “combating” those has proved largely ineffective. activists who tactfully approach Majority slates hit the mainstream struggling companies with viable European activism builds solutions. It seems likely that a large We have pointed to the increasing amount of interest will be paid to trend by shareholder campaigns over As European economies lag in the figuring out how activism techniques the last several years to use slates ongoing eurozone crisis, a number can be best utilized as the “era of consisting of enough candidates to of underperforming companies activism” marches on.
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