If Elliott’s retreat from a proxy contest with Salesforce this week sounds familiar, it’s because it mirrors a similar ending earlier this year between Disney and Nelson Peltz. As with Peltz’s decision to end his battle with the Magic Kingdom, Elliott’s withdrawal at Salesforce came after a strong earnings cycle and swift strategic changes, including dissolving its M&A committee and doubling share buybacks. Even still, Salesforce may not be fully out of the woods. While the tech company made some concessions to activists earlier this year, including adding a ValueAct nominee to its board, the WSJ’s Dean Seal reports that both Starboard and Inclusive Capital were among the activists mounting pressure on the tech giant. Though it’s still early in proxy season, Reuters’ Svea Herbst Bayliss pointed out that  it’s already the third time this year that a prominent activist campaign ended prematurely, citing Peltz at Disney and Loeb at Bed Bath & Beyond.

If the broader tech industry says anything about Salesforce’s fate, expect layoffs and other potential cost-cutting measures designed to boost profitability. The company was in growth mode over the past several years, including deals to acquire Slack (2021) and Tableau (2019), but as JPMorgan’s Anu Aiyengar echoed at the Tulane University Corporate Law Institute last week, investor tides have turned to prioritizing profitability over growth. 

Activity is also kicking up in Asia. The Deal’s Ron Orol reports on the ongoing contest ValueAct is waging across the globe at Seven & i, the Japan-based owner of 7-Eleven. Newly minted with his board seat at Salesforce, Mason Morfit has turned his firm’s sights to the convenience store chain, arguing that a spinoff from Seven & i would increase shareholder value by 80% over the next decade. While ValueAct hasn’t revealed the names of the dissident nominees, more details are likely to surface in the lead up to Seven & i's annual meeting in May. 

Before we go, we wanted to leave you with a few highlights from GPP’s Tulane Corporate Law Institute Conference panel on M&A and the media last Friday featuring deal reporters Laura Cooper (WSJ), Lauren Hirsch (NYT), Liz Hoffman (Semafor), and Berkeley Law professor Steven Davidoff Solomon. Among the insightful commentary was a conversation on the press’ treatment of Sam Bankman Fried (see the slide below). Cooper and Hirsch, both former trade publication reporters, lauded the journalists at Coin Desk for breaking in-depth stories about SBF, noting that trade reporters’ deep, industry-specific knowledge was critical in uncovering the truth at FTX. The panel also debated the Elon-Twitter deal, stakeholder capitalism, and whether everyone besides shareholders got the short end of the stick. Semafor’s Hoffman buttoned it up by noting that at the end of the day, a Board’s ultimate responsibility is to answer to shareholders, which is what Twitter’s Board did in getting a good price from Elon Musk.

Have a great weekend,

GPP Team

The Wall Street Journal: Salesforce Shakes Off Proxy Fight from Elliott

Dean Seal reports on Elliott Management’s decision to withdraw its proxy contest against Salesforce after the software giant's recent strong earnings results and strategic initiatives helped assuage the activist’s criticisms of the company. Read More

The Deal: ValueAct Launches Rare Director Contest at 7-Eleven Owner

The activist firm ValueAct has revealed it will nominate a slate of directors to the board of the Japanese retailer Seven & i Holdings. Ron Orol writes that ValueAct’s primary goal is to convince the retail conglomerate to spinoff its 7-Eleven divisions into a combined “global” 7-Eleven company to be listed on the Tokyo Exchange. Read More

Bloomberg: Activist Ubben Urges Chemicals Producer OCI to Explore Options

Jeff Ubben’s Inclusive Capital firm is calling for the Dutch chemicals company OCI to divest segments of its business. Swetha Gopinath reports that Ubben believes the company’s current structure is responsible for its significant undervaluation. Read More

Harvard Business Review: Leaders Need to Get Comfortable Collaborating on Strategy

Graham Kenny argues that the traditional practice of siloing business decisions to a small, select group of leaders at a company is “a broken model.” As the digital age has progressed and the rapid dissemination along with it, companies must now take a more collaborative approach to decision making. Read More

Reuters’ The Exchange Podcast: Busting Through the Brick Wall Barricading M&A

JPMorgan's Anu Aiyengar joins Breakingviews' The Exchange podcast (live from New Orleans) to share her analysis on the current M&A market and stresses the increasing necessity for "proactiveness and creativity" in order to “get deals done.” Listen Here

Bloomberg: First Citizens to Buy SVB After Biggest Failure Since 2008

Ed Hammond and Matthew Monks report on First Citizens’ $16.5bn purchase of what remains of Silicon Valley Bank ($72b of assets), in a move that will secure First Citizens a spot in the top 15 largest banks in the U.S. Read More

Fort Knoxx: Take-Private Deals and M&A, Post-SVB with Thoma Bravo Senior Partner A.J. Rohde

CNBC Anchor Jon Fortt interviews A.J. Rohde, Senior Partner at Thoma Bravo, about how the collapse of Silicon Valley Bank will disrupt the current M&A environment and potentially "jump-start" take-private deals for tech companies. Watch Here

Sullivan & Cromwell: European M&A and Corporate Governance Hot Topics

In its most recent quarterly report, S&C discusses the marked influx of spinoffs in the M&A landscape, aptly coined “spin-mania.” The firm predicts the prevalence of spins will continue into 2023 amidst a stagnant M&A/IPO market and uncertain macro-economic conditions. Read More

IPO

Financial Times: Middle East on ‘Radar’ of Global Investors as It Enjoys IPO Boom

While the IPO market in the US and Europe remains dampened by high interest rates and broader economic uncertainty, public offerings in the Middle East have exploded largely thanks to the roaring oil market and an infusion of private capital, write Simeon Kerr and Nicholas Megaw. Read More

The Wall Street Journal: Alibaba to Split into Six Groups and Explore Separate IPOs in Major Shake-Up

Raffaele Huang and Clarence Leong discuss Alibaba’s recently announced restructuring plan to split the company into six divisions. The decision is the latest in the series of curtailment and reorganizations initiatives by Chinese authorities designed to reshape China’s burgeoning tech industry. Read More

Bloomberg: Ares Considers New $400 Million SPAC Despite Market Lull

Despite the SPAC boom’s slowdown, Gillian Tan and Kamaron Leach report that Ares Management has begun talks to raise $400m for a new so-called “blank check” company. Read More

ESG

Harvard Law School on Corporate Governance: The SEC Sets Its Sights on ESG

Isaac Mamaysky, partner at Potomac Law Group, pens a piece discussing potential steps the SEC may take to combat erroneous or misleading ESG claims made by investment managers as the demand for environmentally and socially conscious investment vehicles continue to grow. Read More

Axios: SVB's Collapse Was a Failure of ESG (As in Governance)

Emily Peck argues that Silicon Valley Bank’s collapse was largely caused by lapses in the bank’s governance structure (or lack thereof). Namely, the now-defunct lender didn’t have a Chief Risk Officer for eight months last year. Read More

FROM OUR DESK TO YOURS

In their most recent episode of the Pivot podcast— examining trends across business, tech and politics— co-hosts Kara Swisher and Scott Galloway highlight one of the fundamental weaknesses that led to the implosion of Silicon Valley Bank: communications. While the bank’s collapse was ultimately caused by a liquidity blind, Galloway asserts that the nature and cadence of SVB’s communications created “panic” among its clients instead of calming them, exacerbating the situation beyond the bank’s control and forcing government regulators to take action. If there’s ever been a case for the value-add of strategic communications, this is it.

In a similar vein—though if you’d prefer to read rather than listen— check out Sally Susman’s new book Breaking Through. Susman, Pfizer's chief corporate affairs officer, shares insight into the fast-paced and oftentimes difficult-to-navigate world of communications, the behind-the-scenes experience overseeing communications during Covid, and the scramble to produce and distribute a global vaccine.

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• April 12, 2023: Semafor’s World Economy Summit – Washington, D.C.

• April 26, 2023: Berkeley Spring Forum on M&A and the Boardroom – Berkeley, CA

• April 30-May 3, 2023: Milken Institute Global Conference 2023 – Beverly Hills, CA

• May 10, 2023: Axios BFD 2023 – San Francisco, CA