Southwest Gas Issues Icahn Pill, Plus Two Unique Activist Campaigns
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Companies under pressure – from a stock price hit, hostile bid, an activist investor, or some kind of combination – sometimes adopt a shareholder rights plan (aka, poison pill) for protection, though such a move can cause more harm than good if not issued and communicated properly. Southwest Gas answered Carl Icahn’s recent poison pen letter with its own poison pill this week. Current generation pills sunset these after a year and try to appear as shareholder-friendly as possible to the rest of the investors, but it's still poking the bear. Icahn knows this poking well. Ichan’s swallowing of Phillips Petroleum’s poison pill in 1985 helped him become a household name across Corporate America. Icahn launched a tender offer for Southwest Gas on Thursday.
Two other smaller activist campaigns to note. The founder of NextGen Healthcare, Sheldon Razin, lost his proxy battle this week to replace members of the board. NextGen shareholders elected all nine of the company’s slate. The campaign by Razin, who is also the company’s largest shareholder, is a rare but not unheard-of case of a company leader/founder launching a contest against their own institution. Razin held his high in defeat with a gracious statement following the meeting.
Finally, hedge fund Chatham Asset Management took a page out of Icahn's (and Elliott’s) book this week by not only ramping up its campaign against R.R. Donnelley but by offering to buy the company outright. Chatham’s high premium offer may well be posturing, as is often the case with hedge funds attempting to own a company. But it’s financially backed by Jefferies, and may well be real.
Have a great weekend,
Chris and Mike
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Reuters: Southwest Gas Adopts Poison Pill to Hinder Activist Icahn's Deal Protests
Southwest Gas Holdings said on Monday it had adopted a shareholder rights plan in response to Icahn’s campaign against the company. Read More
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MarketWatch: Chatham Asset Management in Bid to Acquire R.R. Donnelley
The hedge fund offered to acquire the rest of the stock in R.R. Donnelley & Sons Co. it doesn't already own for $7.50 a share in cash. Read More
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Forbes: How Good Is Good Enough? The Corporate Move Toward ESG
Business leaders like to think in numbers, but the bigger reality is that the hearts and minds of people are changing — and those hearts and minds are attached directly to their wallets. Read More
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Bloomberg: IBM, American Air, Southwest Snub Abbott and Back Biden on Shots
International Business Machines Corp., American Airlines Group Inc. and Southwest Airlines Co. will follow President Joe Biden’s mandate requiring that employees be vaccinated against Covid-19, defying an order from the Texas governor blocking such actions. Read More
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Bloomberg Law: Biden ESG Push Converges With Steps to Spur Competition
ESG and antitrust issues are starting to converge as Democrats seek ways to boost competition while pushing companies to become better corporate citizens. Read More
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Wall Street Journal: Jana Partners Takes Stake in Macy’s, Urges E-Commerce Spinoff
Activist investor says stand-alone e-commerce business would be worth a multiple of Macy’s current market value. Read More
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Harvard Law School Forum on Corporate Governance: Sustainability Impact in Investor Decision-Making
The goal most associated with institutional investment management is earning a financial return. But earning money is obviously not the only goal we have for our lives or for our world. It exists alongside broader goals concerning the quality of the social and natural environment we inhabit, or at least its sustainability. Read More
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The duties of social media companies to moderate the content that appears on their platforms has been much discussed, with many companies developing and publicizing robust content moderation policies and processes. But companies are also grappling with hard decisions about whether, to remain consistent with their corporate values, there are certain customers they should not serve at all – by providing consulting services, powerful technology, or even just a place to stay out of town. Going even a step further, many companies are also looking for ways to build corporate values right into the very design of their products. As activists and institutional investors increase their focus on the environmental and social impacts of the products and services of the companies in which they invest, more companies will need to pay attention to the issue of responsible sales and innovation.
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