As the activist season heats up, investors and practitioners gathered this week at the Skytop Shareholder Activism Summit to kibitz about everything from universal proxy to the role of wolfpacks.

Panelists Scott Grinsell, Head of Activism Engagement Strategy at Elliott Management, and Scott Ferguson, Founder & Managing Partner at Sachem Head, shared their views on the activism landscape, the impact of the universal proxy rule and the M&A market. Grinsell suggested that while it is still too early to determine the impact of universal proxy, he expects companies will increasingly look to settle with activists. Ferguson acknowledged that a “wolfpack” of multiple activists, as is currently the case with Salesforce, makes the settling process more difficult for companies due to competing interests. Other panelists raised the issue of the universal proxy rule, making fights more personal and forcing activists to single out specific board members.

In a ruling that turned heads in Delaware and NY and across board rooms, the Delaware Chancery Court ruled in a toxic workplace case against McDonalds. The court’s decision is the first time that corporate officers will be held accountable to investors for the same oversight duties as board members. The ruling stated that corporate officers have “an obligation to make a good faith effort to put in place reasonable information systems” and cannot “consciously ignore red flags indicating that the corporation [is] going to suffer harm.” In a memo, Sullivan & Cromwell notes that this level of oversight has only ever been applied to board directors. Jennifer Kay of Bloomberg Law writes that the ruling is a warning to executives that they “may not be able to dodge liability to shareholders under Delaware law.” 

Lastly, Bloomberg’s Leah Nylen reported that a federal judge in California handed the Lina Khan-led FTC its first ‘L’ when it denied the agency’s demand to block Meta’s acquisition of the virtual reality company Within. While the FTC's argument that the deal would harm “future competition in an undeveloped market” failed to convince the U.S. District Judge in California, the battle is long from over. Khan has a number of possible paths forward, including an appeal or administrative litigation; she already survived Meta’s initial request to remove her from the antitrust case. In a 2-1 vote, FTC commissioners pointed to Khan’s “experience and knowledge of tech platforms” as being pertinent to the matter. Time will tell which side gets the ‘W’. 

Have a great weekend, 

GPP Team 

Financial Times: Dealmakers Tackle Rising Rates with New Pitch: Take the Debt With You 

Antoine Gara and Eric Platt outline how as interest rates climb, the new priority for private equity firms and corporate dealmakers is to avoid deal structures that leave the door open for debt refinancing. Read More

Sullivan and Cromwell: Delaware Court of Chancery Holds for the First Time that Corporate Officers Owe a Duty of Oversight

In a precedent-setting decision, the Delaware Court of Chancery has ruled that corporate officers can be held accountable to investors for the same duty of oversight as board members. Read More

New York Times: Judge Is Said to Let Meta’s Virtual Reality Deal Move Forward

According to the NYT’s David McCabe and Sheera Frenkel, a federal judge in California has declined the FTC’s request to block Meta’s proposed acquisition of virtual reality company Within. Read More

Bloomberg: FTC Rejects Meta Request to Bar Khan From Merger Case

Leah Nylen and Emily Birnbaum report that FTC Chairwoman Lina Khan will remain involved with the agency’s antitrust case against Meta’s proposed acquisition of the VR company Within after a 2-1 vote. Read More

Reuters’ Breakingviews: Meta Exposes Danger of Trustbusting Virtual Risks

After a California Judge halted the FTC's effort to block Meta from buying the VR fitness app Within, the agency could now be facing its "first major loss", writes Jonathan Guilford. Read More

SSRN: The Value of M&A Drafting

Academics from Duke University’s School of Law, the University of California at Berkeley’s School of Law and Stanford Law School examine the components of M&A agreements and research how much impact time-sensitive deals or leaked announcements have on the structural makeup of deal contracts. Read More

Semafor: What Happened to the Star Investment Banker?

Liz Hoffman explores how the banking landscape has changed, as fewer individuals are able to operate with the same swagger and independence as before. Read More

Freshfields: 2022 De-SPAC Debrief

Freshfields attorneys Michael Levitt, Valerie Ford Jacob and Sebastian Fain discuss the 2022 SPAC market, noting that although the year was challenging for the go-public vehicle, last year saw the second-highest levels of SPAC M&A ever. Read More

DealBook: A Short Seller Costs an Indian Giant Billions

The Adani Group has responded to a slew of allegations made against the company by short-seller firm Hindenburg Research. The company, helmed by Asia’s now-former richest man Gautam Adani, saw $70b of market valuation crumble as the details of the report emerged. Read More

Reuters: Tokyo Booms for Shareholder-Relations Advisers as Activists Raise Pressure

Makiko Yamazaki chronicles how the "rising wave" of shareholder activism in the Japanese market is driving Japan’s businesses to start taking corporate governance issues more seriously. Read More

Solomon Partners: Trends Impacting Retail M&A 2023

In their annual letter on retail M&A trends, Solomon Partners emphasizes three major points: floundering capital markets’ effect on M&A, the advantages of strategic acquirers over PE firms, and the increased likelihood of potential sales of growing DTC brands. Read More

PJT Camberview: 2023 Proxy Season Review 

The advisory firm speculates how universal proxy rules will "reshape" the activism landscape, including making fights more personal and political and decreasing the impact of asset managers like BlackRock and Vanguard. Read More

FT Talent Show: How to Build a Lasting Career in Financial Journalism

US Corporate Finance and Deals Editor James Fontanella-Khan discusses his path to journalism, tales from his career, and finding unique financial stories. Listen Here

ESG NEWS

Fortune: It’s No Surprise Salesforce’s Shareholders are Demanding a Reset

Though Benioff’s approach has reaped significant rewards for stakeholders and shareholders alike, Alan Murray writes that it’s "no surprise” that shareholders are eager for a change given the company’s recent performance and backlash to Benioff championing stakeholder capitalism. Read More

New York Times: Politicians Want to Keep Money Out of E.S.G. Funds. Could It Backfire?

The political backlash to ESG funds is causing some state treasurers to divest from ESG-focused funds and companies. However, Ron Lieber writes that decision potentially violates a treasurer’s fiduciary duty to act in the best economic interest of its citizens rather than that of the state. Read More

Skadden: ESG in 2022 and Predictions for 2023

Skadden looks back on prevailing ESG trends from the past year and predicts increased focus on ESG policies and competition law, and increased activist pressure to link compensation to ESG metrics. The firm also argues that the "ESG bubble" is unlikely to burst in 2023. Read More

FROM OUR DESK TO YOURS

Winter is (finally) coming to the tri-state this weekend. If you’re looking to brush up on some culture while hunkering down in central heating, check out the Edward Hopper exhibit at the Whitney Museum, which some GPPers visited last Saturday. It’s a collection of the artist’s works focused on New York City, which include his illustrations for magazine covers, sketches of banal city life, and personal letters, like his correspondence with the Power Broker himself, Robert Moses, NIMBYing about NYU. Some things never change.

In keeping with this week’s dusting, which was the first snow of the winter in New York City, and the coming weekend’s frigid forecast, check out the 2023’s Winter Jam. Supplied with artificial snow, the festival is held in Central Park and offers a wide array of wintry activities to choose from, including ice carving, ski lessons, ice bowling and everyone’s winter-Olympics-favorite—curling. 

PEOPLE MOVES

• Madeline McIntosh, CEO of Penguin Random House, is leaving the publishing giant. Read More

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• Amidst a wider programming shake-up at CNBC, current “Worldwide Exchange” anchor Brian Sullivan will lead a new show at 7 PM titled “Last Call.” Frank Holland will take over Sullivan’s vacated 5 AM slot. Read More

• BDG Media is suspending operations of their subsidiary Gawker and cutting 8% of their full-time staff. Read More

• Fellow NY Jets fans rejoice, our archnemesis Tom Brady has retired from the NFL (again). Read More

• February 8, 2023: WSJ CFO Network Summit – New York, NY

• March 2, 2023: Proxy Season Kick Off Party – New York, NY

• March 6, 2023: Council of Institutional Investors 2023 Spring Conference | Governance as the Linchpin: The "G" is Key – Washington, DC

• March 16, 2023 – Barron’s: ESG Investing at a Crossroads – Virtual