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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
2
Selina Sagayam Gibson Dunn
+44 20 7071 4263 [email protected]
Dennis Friedman Gibson Dunn +1 212 3513900
Olly Scott Bell Pottinger
+44 207 861 3891 [email protected]
Jonathan Kaye Moelis
+1 212 883 3540 [email protected]
Cas Sydorowitz Georgeson
+ 44 870 703 0302 [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 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.
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
US: 2013
Sources: Shark Repellent; 13D Monitor, Wall Street Research, Dealogic M&A Manager
414 campaigns
90 proxy fights
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
Europe: 2013
Where is Activism Taking Place?
• Regional Split 2013 (2012) (Activist Insight) Industry Split (2012-2013) (Shark Repellent)
5
Consumer & Retail23%
Technology17%
Financials14%
Energy14%
Industrials9%
Healthcare9%
Telecom 5%
Materials7%
Utilities2%
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
6
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
The Activist’s Agenda: Recent Examples in the US
Agenda Target Activist
Share repurchase
(return capital)
Greenlight
Reduce costs
(operational
improvements)
Corvex
JANA
Revise
management
compensation
CalPERS
Remove
management/
board
Corvex,
Related
Spin or divest
assets
Icahn
Third Point
Agenda Target Activist
Board
representation
JANA
Breakup or split Trian
Elliott
Influence M&A Eminence
Revoke rights
plan
Third Point
Acquire the
company
Elliott
Shorting Pershing
7
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
8
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
9
The “New Dialogue” – and How it Differs (US vs Europe)
What are we seeing
from the Activists? US UK/Europe
More Campaigns • 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
• Increase of circa 3.5% in 2013
compared to 2012.
• Q1 2014 has seen a significant
number of UK campaigns
More Activists • 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 …
• 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
10
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 UK/Europe
Companies are
Better Prepared
• 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
• 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
Willingness to
Engage and/or
Listen
• “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
& Higher Quality
Board
Representation
• Powerful tool…more activists seeking to
effect agenda through direct Board
representation or appointees
• Higher quality of candidates proposed
• High number of settlements admitting
activist appointees to the Board –
typically a “must” for settlement
• More NEDs are willing to work
with activists
• Higher quality/ broader pool of
candidates
12
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 Points of Note/ Relevant Questions for Activists & Issuers
Building a “Relevant”
Stake & “Dawn Raids”
• 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.
The Approach …
Activist At the Door
• 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 Points of Note/ Relevant Questions for Activists & Issuers
Pressing the Public
“Play” Button
• 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. 16
Activist Campaign Strategies & Points of Note (cont.)
Strategy Points of Note/ Relevant Questions for Activists & Issuers
Media Warfare • 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?
Assessing
Shareholder
Sentiment &
Garnering
Support
• 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?
17
Activist Campaign Strategies & Points of Note (cont.)
Strategy Points of Note/ Relevant Questions for Activists & Issuers
Engaging With
Other Stakeholders
• 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
Using Minority
Shareholder Rights
• 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 Points of Note/ Relevant Questions for Activists & Issuers
Requisitioning
General Meetings
• 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?
Gathering Formal
Shareholder Support
• 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?
19
Activist Campaign Strategies & Points of Note (cont.)
Strategy Points of Note/ Relevant Questions for Activists & Issuers
Getting the Votes In • 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?
Litigation • 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
20
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
25
APPENDIX 1– ACTIVIST AGENDAS & STRATEGIES
26
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
29
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, PMC-
Sierra, 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
Viking Global Investors US$28.5bn
Oct 2013
Connecticut Porsche SE#, Canadian Pacific Railway, Facebook,
Valero Corporation
West Face Capital Greg Boland US$2.5bn
Dec 2013
Toronto Longreach Oil and Gas,
* - Long Investors # - 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 Harbour
Blum Capital
Breeden Partners
Breeden Europ.
Cartica Capital
Partners
G4O Hermes Knight Vinke
Lazard Korea
Corp Gov
Legion Partners
New Mountain
Relational Investors
Shamrock Sparx Value Creation
Fund
CalPERS $500m+ $500m $300m (Exited)
$200m $300m+ Exited $300m+ $100m $200m+ $1,300 m X X
CalSTRS $200m $250m $300m X $350m $200m X $500m $1,300 m X
Pension Fund Breeden Partners
Cartica Capital
Sandell Elliott G4O Hermes Mason Capital
New Mountain
Pershing Square
Relational
Investors
Starboard Value
Stinson Taconic
Alaska Retirement Management Board X State of Wisconsin Investment Board X $150m Philadelphia Board of Pensions and Retirement X X
Devon County Council X X
Hampshire Pension Fund X LA County Employees Retirement Association X Exited Maryland State Retirement and Pension System X X
North Carolina Department of State Treasurer X
Nottinghamshire County Council Pension X Public Employees Retirement New Mexico X X X X X University of Texas Inv Mgt Company X X X
West Midlands Pension Fund X
West Yorkshire Pension Fund X
The Church of England 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
34
Pension Fund Cevian Capital
Elliott Glenview Capital
Healthcor Jana Partners
Knight Vinke
P2 Capital
Pershing Square
Starboard Value
Taconic Third Point
Trian Partners
ValueAct Capital
HighfieldCapital
Wexford Spectrum
State of New Jersey Dpt of the Treasury $150m
$200m
$100m $100m $100m $75m $100m $150m
CPP Investment Board X Exited X X University of California Retirement Plan X X Office of the New York State Comptroller X Texas County and District Retirement System $50m $40m $18m X X Teachers Retirement System of Texas X X School Employees Ret System of Ohio X X X X X
Florida State Board of Administration
$100mn
X $100m $125m X X X
Fire and Police Pension Association of Colorado $30m School Employee Ret Sys of Missouri X Missouri State Employee Retirement System X
Appendix 3 - State Pension Funds and their Activist Investments
35
Q&A
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36
Gibson Dunn & Crutcher
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 anti-
takeover 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.
37
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The Georgeson Story
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Moelis & Company Overview
39
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SECTOR EXPERTISE HIGHLIGHTS
SELECT TRANSACTIONS
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Sale to Discover and
associated asset sales
to Sallie Mae and Citi
$61.2bn
Sale to Inbev
€30.0bn+
Disposal of most of
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derivative portfolio
$35.1bn
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$29.6bn Chapter 11
Reorganization
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$28bn
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and 3G Capital
$26.5bn
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$24.9bn
Restructuring
of Dubai World
$15.7bn
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Fisher Scientific Inc.
$10.7bn
Sale to
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$9.4bn US asset sale to
The Blackstone Group
A$5.0bn Merger of
Australian Interests
A$4.3bn Restructuring
€4.1bn
Restructuring
¥278.4bn
Combination with
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Exchange
$2.2bn
Senior dividend
and notes offering
Bell Pottinger
40
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