2019 ADVISER AWARDS HUDSON EXECUTIVE CAPITAL LAGARDÈRE HINDENBURG INVESTMENT RESEARCH ACTIVIST INSIGHT MONTHLY VOLUME 8 ISSUE 11 | DECEMBER 2019 CONTENTS ACTIVIST INSIGHT MONTHLY | DECEMBER 2019 EDITOR’S LETTER 03 A WORD FROM ELANA DURÉ 2019 ADVISER AWARDS 05 THE TOP LAW FIRMS AND PROXY SOLICITORS IN ACTIVISM IN 2019 GOODBYE TO ALL THAT 18 ACTIVIST IN FOCUS: HUDSON EXECUTIVE CAPITAL LOSING CONTROL 21 CAMPAIGN IN FOCUS: LAGARDÈRE UPGRADE 23 VULNERABILITY PROFILE: KAR AUCTION SERVICES THE NEW YARDBIRD 25 SHORT ACTIVIST IN FOCUS: HINDENBURG INVESTMENT RESEARCH SHORT NEWS IN BRIEF 27 DEVELOPMENTS FROM ACTIVIST INSIGHT SHORTS NEW SHORT INVESTMENTS 28 RECENTLY DISCLOSED POSITIONS FROM ACTIVIST INSIGHT SHORTS BENIGN ACTS 30 ESG CORNER UPCOMING EVENTS 31 CONFERENCES, EVENTS, AND MEETINGS TO LOOK OUT FOR NEWS IN BRIEF 33 RECENT UPDATES FROM ACTIVIST INSIGHT ONLINE NEW INVESTMENTS 36 RECENTLY DISCLOSED POSITIONS FROM ACTIVIST INSIGHT ONLINE MOST READ 38 THE MOST POPULAR STORIES FROM ACTIVIST INSIGHT ONLINE MONTHLY SUMMARY 39 THE WHAT, WHERE, AND HOW OF ACTIVIST INVESTING All rights reserved. The entire contents of Activist Insight Monthly are the Copyright of Credits (all / Shutterstock.com): Activist Insight Ltd. No part of this publication may be reproduced without the express prior Page 7: Bed Bath & Beyond: photobyphm written approval of an authorized member of the staff of Activist Insight Ltd, and, where Emerson Electrics: Tada Images permission for online publication is granted, contain a hyperlink to the publication. Rocky Mountain Chocolate Factory: JHVEPhoto Page 10: AT&T: Jonathan Weiss The information presented herein is for information purposes only and does not constitute Cerner: photbyphm and should not be construed as a solicitation or other offer, or recommendation to acquire Celgene: rafapress or dispose of any investment or to engage in any other transaction, or as advice of any Page 12: Ashland: Pavel Kapysh nature whatsoever. EQT: IgorGolovniov Nestle: testing PUBLISHED BY: Page 18: Comerica Bank: ZikG Activist Insight Ltd Page 21: KAR Auction Services: Casimiro Page 25: Air Products and Chemicals: Andy Borysowski 4 Old Park Lane, 1350 Avenue of the Americas, Page 26: FibroGen: Sundry Photography Mayfair, London, W1U 6PZ Floor 4, New York, NY, 10019 Page 31: Xerox: Jonathan Weiss +44 (0) 207 129 1314 +1 646 475 2214 Page 32: FirstGroup: Tupungato Page 33: BHP Billiton: Adwo www.activistinsight.com Page 34: Acacia Research: Pavel Kapysh [email protected] Page 35: Inmarsat: photobyphm Twitter: @ActivistInsight EDITOR’S LETTER ELANA DURÉ, SENIOR FINANCIAL REPORTER ELANA DURÉ AT ACTIVIST INSIGHT. [email protected] As the year ends, we reflect on 2019’s slew of campaigns, Georgeson, and Greenbrook Communications. While including Third Point Partners’ bout at Sony and Elliott activist activity was slightly down in Europe this year – with Management’s bid at AT&T. Even the fourth quarter is seeing just 117 companies publicly subjected to activist demands its fair share of action, with Carl Icahn’s promise to launch as of September 30, compared to 134 during the same a proxy contest at Occidental Petroleum and his push for period in 2018 – experts still see plenty of opportunity for Xerox to merge with HP. Plus, new campaigns at Valaris, activism on the continent. The U.K. saw a record year, Elliott Instructure, and Altran. Based on the end of this year, 2020 Management focused heavily on Germany, and companies is sure to be an even more exciting one! across Europe were involved in contentious M&A. As in years past, we have dedicated this December issue to We are now lining up our publication schedule for next year the advisers that work behind the scenes on behalf of activists and are eager for your organization to join us. To learn more and companies. Our advisers league table recognizes the about opportunities for your firm to create a report with players most active in the space. Congratulations to Olshan Activist Insight, click here. Potential topics include Asia, Frome Wolosky and Okapi Partners, who ranked first in their Canada, and governance. categories for overall activist campaign involvements in 2019. Last month, we also produced a live blog on Activist Insight For those wondering how they can participate in the Online tracking the most notable investments disclosed before rankings, we accept submissions year-round. We also do the latest 13F deadline (big moves include Trian Partners periodic data drives and a final push in early October of each ditching its holding in PPG Industries and Pershing Square year. To keep us informed of your representations, please Capital Management exiting Automatic Data Processing.) ask your marketing teams to add data@activistinsight. Plus, we provided a summary spreadsheet of the 13F com to their mailing lists. disclosures. In the third quarter, dedicated activists invested in 12 companies Activist Insight Vulnerability previously predicted Elsewhere in the magazine, we look at the evolution of would attract activist attention. Amber Capital’s campaign at French media conglomerate Lagardère, which started amicably and progressed to a Be sure to listen to our latest podcast episodes if you haven’t bitter court battle. Amber is pushing the firm to improve already, featuring a reflection on Starboard Value’s its corporate governance and change its strategy, but victory at Darden Restaurants and a conversation Lagardère claims the activist’s “destabilization” campaign with Driver Management’s Abbott Cooper. If you or has led to a drop in the stock price. With the French your firm would like to be featured on a future episode, government already considering putting up roadblocks to please email [email protected]. activism, the potential for the situation to become a focal point in French business is high. And with that, we hope our readers have a wonderful holiday season and a happy new year. Look out for our seventh This issue of Activist Insight Monthly also profiles Douglas annual review in early 2020. Braunstein’s Hudson Executive Capital, which launched its first-ever proxy contest at USA Technologies in October. In [email protected] addition, the magazine features an in-depth look at short @ActivistInsight seller Hindenburg Investment Research, which focuses on exposing fraudsters. Plus, learn about Canada’s recently codified corporate governance practices. Beyond the magazine, we recently launched Activist Investing in Europe 2019 with Skadden, Citigroup, ACTIVIST INSIGHT MONTHLY DECEMBER 2019 | WWW.ACTIVISTINSIGHT.COM 03 ACTIVIST INSIGHT 1 SUITE, 5 PRODUCTS. THE DEFINITIVE RESOURCE ON ACTIVIST INVESTING AND CORPORATE GOVERNANCE ACTIVIST INSIGHT ACTIVIST INSIGHT ONLINE GOVERNANCE 2,500+ ACTIVIST PROFILES, LIVE NEWS & 3,500+ U.S. ISSUER PROFILES, GOVERNANCE ALERTS, COMPREHENSIVE HISTORICAL RED FLAGS, SEARCHABLE DIRECTOR CAMPAIGN DATABASE. DATABASE. ACTIVIST INSIGHT ACTIVIST INSIGHT VULNERABILITY SHORTS 3,000+ U.S. ISSUER ACTIVISM 150+ ACTIVIST SHORT SELLER PROFILES, VULNERABILITY PROFILES, PEER LIVE NEWS AND ALERTS, SHARE PRICE COMPARISONS, IN-DEPTH REPORTS. TRACKING. ACTIVIST INSIGHT MONTHLY IN-DEPTH FEATURES & INTERVIEWS, CAMPAIGN OVERVIEWS, NEWS & INVESTMENT SUMMARIES. START YOUR FREE TRIAL AT WWW.ACTIVISTINSIGHT.COM Although 2019 saw a slight dip in the number of companies publicly subjected to activist demands compared to last year, according 2019 to Activist Insight Online, advisers in the space told Activist Insight Monthly that they were just as busy as ever – if not more so. Many noted that 2019 saw an uptick in non-traditional or first-time activists advancing demands at companies. In ADVISER addition, experts in the space noted that few situations went to a vote this year, with the preference of both parties to settle, formally or otherwise. AWARDS “I think the bias of companies is always to settle and that’s always plan A,” Kai Liekefett, co- chair of Sidley Austin’s shareholder activism practice, told Activist Insight Monthly. “But in some situations, the dissidents are just widely unrealistic, and they’re stuck in their positions and they just want to fight.” OUR ANNUAL ADVISER AWARDS DRAW ON THE COMPREHENSIVE COVERAGE In addition, activism continued to expand globally with many U.S.-based funds looking for OF ACTIVIST INSIGHT ONLINE IN HIGHLIGHTING THE MOST ACTIVE LAW cross-border opportunities. The U.K. and Japan were popular destinations this year. “For AND PROXY SOLICIATION FIRMS IN SHAREHOLDER ACTIVISM OVER THE PAST this type of assignment, success requires both a global and local perspective,” Michael 12 MONTHS, AND THE ADVISERS BEHIND SOME OF THE BIGGEST ACTIVIST Verrechia, Morrow Sodali’s managing director of activism and contested situations, said. CAMPAIGNS OF 2019’S PROXY SEASON. 2019 also saw high opposition to M&A in various forms. “I think it’s reasonable IN THIS FEATURE, ACTIVIST INSIGHT FIRST PROFILES THE MOST PROLIFIC LAW to expect more of that going forward,” Verrechia added. AND PROXY SOLICIATION FIRMS BY TOTAL CAMPAIGN INVOLVEMENT BEFORE REVEALING THIS YEAR’S WINNERS IN FOUR CATEGORIES. THE ACTIVIST INSIGHT 2019 ADVISER AWARDS LAW FIRMS BUSIEST FIRMS BY TOTAL CAMPAIGN INVOLVEMENT OLSHAN FROME WOLOSKY TOTAL CAMPAIGN INVOLVEMENT: 105 KEY CONTACTS: ANDREW FREEDMAN, STEVE WOLOSKY For the fifth consecutive year, Olshan placed first in our law firm rankings for overall involvement, representing activists in a record number of campaigns. “2019 was plenty active,” Andrew Freedman, co-head of Olshan’s activist & equity investment group, told Activist Insight Monthly, adding that he believes 2020 will be even busier. Olshan worked on Toby and Derek Rice’s comeback contest at EQT, which saw the first dissident majority slate elected through a universal ballot. The New York-based law firm also represented Legion Partners Asset Management, Macellum Advisors, and Ancora Advisors in their campaign at Bed Bath & Beyond. After just a few months, co-founders Warren Eisenberg and Leonard Feinstein retired from their roles as co-chairmen, CEO Steven Temares stepped down from the helm, the board created a “business transformation and strategy review” committee, and four activist nominees were appointed as directors.