Spooky news this week for VF Corp which is now dealing with the one thing scarier than an activist investor – two activists. One day after VF Corp appointed former Nike president and CMO Trevor Edwards to its Board, Bloomberg’s Crystal Tse reported that Legion Asset Management has become the second activist (following Engaged Capital) to target the apparel and footwear company. While Legion’s position size has not been revealed, it is reportedly urging VF Corp to divest famous boot brand, Timberland.

Now a question on the mind of many activists, double down or take your money and run? A new report from Diligent Market Intelligence looks at the former option and examines the strategy of increasing investment and pressure on a company despite a volatile market and lack of returns. Starboard was highlighted for its campaign against AI chatbot company, LivePerson. In May, Starboard reignited a proxy contest with the company following a total follower return of negative 87%. A source close to the activist says Starboard believes it has little to lose by retaining its position and more to gain from fixing what it sees as “corporate mismanagement.”

Finally, there are signs of life in the M&A business with news of Chevron’s $53 billion acquisition of rival Hess. The deal is the latest transaction that brings together two oil behemoths, closely following Exxon’s purchase of Pioneer Natural Resources. In an equally active industry for M&A, the pharmaceutical sector saw deals getting done with Vista Equity Partners’ $4 billion deal for software company EngageSmart and Roche’s $7 billion acquisition of drugmaker Roivant. Bloomberg’s Ben Scent says we can expect to see more activity, pointing to the energy sector in particular as ripe for further consolidation. What a treat!

Have a great weekend,

GPP Team 

Bloomberg: Timberland Owner VF Facing Second Activist Push by Legion

Crystal Tse writes that activist investor Legion Partners is now the second activist to call for change at VF Corp, which comes a week after Engaged Capital called on the company to review non-core divestitures and commit to making no further acquisitions. Read More

Diligent Market Intelligence: Activists Double Down on Underperforming Investments

A new report from Diligent Market Intelligence examines how activist investors have navigated the volatile market, focusing on the activists who double down rather than cut their losses. Read More

Wall Street Journal: Chevron to Buy Hess for $53 Billion

Collin Eaton and Peter Stiff report that less than two weeks after Exxon’s acquisition of Pioneer, America’s second-largest oil company (Chevron) said it would buy Hess in an all-stock deal worth $53 billion. Read More

Bloomberg: Dealmaking Surge Turns October into Busiest M&A Month in Years

Following Monday’s Chevron-Hess merger announcement, Ben Scent notes that $139 billion worth of U.S. public takeovers have been announced in October, triple the same period last year and on par with pre-pandemic levels. Read More

CORPORATE GOVERNANCE

Axios: The SEC vs. Stealth Activists

The Securities and Exchange Commission is taking a closer look at how large investors use derivatives to build positions and exploring possibly remedies to make the process more transparent. Elliot and other activist investors are lobbying hard against any actions from the SEC arguing “activism plays a critical role in the health of the U.S. capital markets.” Read More

Activist Investing Today Podcast: Evercore’s Lin Eyes White Squire Double-Edged Sword

Gloria Lin, managing director in Evercore’s corporate strategic advisory business, joins the Activist Investing Today Podcast to discuss corporate governance, “bad deals” and trends in M&A activism amid a cooling deal market. Listen Here

The Deal: Trian’s Allstate Effort Could Lead to Divestitures

Following the disclosure of Trian Management’s accumulated stake in Allstate, Ron Orol of The Deal reports that the insurance giant may consider divesting noncore assets so it can cut losses and focus on its core property and liability insurance operation. Read More

Bloomberg Law: Fiesta’s $225 Million Private Equity Sale Draws Investor Lawsuit

Mike Leonard details an investor lawsuit against Fiesta Restaurant Group for allegedly ignoring “superior bids” in order to appease activist investor Arex Capital Management who wanted quick liquidity and an exit from its investment. Read More

CORPORATE GOVERNANCE

Morning Brew: Business Leaders Struggle with Crisis Communications

Neal Freyman reports on Paddy Cosgrave’s resignation from Web Summit after controversial making comments on the Israel-Hamas conflict, illustrating a wider corporate reluctance to address the topic. Read More

CLS Blue Sky Blog: Big Three (Dis)Engagements

Professors Dhruv Aggarwal, Lubomir Litov, and Shivaram Rajgopal discuss their findings on the influence of the "Big Three" (BlackRock, Vanguard, State Street) on corporate governance. Contrary to claims, the research indicates, that when the asset managers engage portfolio companies on matters of corporate governance, there is no significant effect on value. Read More

Harvard Law School Forum on Corporate Governance: The CEO Shareholder: Straightforward Rewards for Long-term Performance

Joel Paula, a Policy Advisor at FCLTGlobal, advocates for long-term executive pay plans and to ensure alignment with company objectives, criticizing short-term remuneration trends and highlighting the potential of new technology in evaluating executive pay. Read More

M&A

Fortune: M&A to Explode in 2024 as Roughly 1,200 Companies are Expected to Run Out of Money

Luisa Beltran calls for a rebound in M&A and IPOs next year following comments from executives at the AlphaMarket Growth Summit. The sense was that a large amount of private companies will run out of money in 2024 and will need to generate market activity to fund their balance sheets, while idle cash raised in 2021 will need to be put to work through M&A. Read More

ESG

Bloomberg: Citigroup CEO Jane Fraser Says the ‘New S’ in ESG Is Security

Matthew Martin covers Citigroup CEO Jane Fraser’s focus on security issues, such as food security, energy security, defense, and financial security, on her panel at Saudi Arabia’s The Future Investment Initiative conference. Read More

Financial Times: Letter: Shelving Plans to Improve Corporate Governance is Wrong Call

A public letter authored by Sandy Peters and others, Senior Head Advocacy, CFA Institute; Member, FRC Stakeholder Insights Group, critiques the UK government’s decision to abandon governance reforms that have been in the works for over five years. Read More

DealBook: Is E.S.G. Falling Out of Favor?

DealBook reports on the declining ESG dollars in the market, noting that ESG fund closings outpaced openings for the first time in September and highlighting the $2.7 billion of investor outflows from ESG funds reported by Morningstar last quarter. Read More

FROM OUR DESK TO YOURS

GPP hit the movies this weekend to watch the story of a greedy octogenarian who would do anything to squeeze profit and trample those who stand in his way, and for once we are not talking about Carl Icahn or Nelson Peltz. No, we’re talking about Killers of the Flower Moon, Martin Scorsese’s latest masterpiece examining a series of actual murders that afflicted the Osage Nation in Oklahoma in the 1920s, which also features a truly tremendous lead performance by Lily Gladstone (!). If you can’t find three hours and 26 minutes of spare time for one sitting (can’t fault you there), we recommend reading the original nonfiction book by David Grann, which the movie is based on, recounting a tragic and largely forgotten chapter of America’s history.

On Monday October 30, GPPers will be stepping out to The Lighthouse at Chelsea Piers to celebrate the 10^th anniversary of Teens for Food Justice in support of their innovations to improve fresh food access, nutrition and health in NYC’s low-income communities through school-based, youth-led hydroponic farming. Academy Award Winning star of Steven Spielberg’s West Side Story and host of the 2022 and 2023 Tony Awards Ariana Debose will be emceeing the event to coincide with a delicious meal curated by celebrity chef and Food Network star Melba Wilson. 

PEOPLE MOVES

• Morgan Stanley CEO James Gorman will be stepping down as CEO by the end of the year and will be replaced by Edward (Ted) Pick who currently leads Morgan Stanley’s investment-banking and trading operations. Read More

• Reuters Breakingviews launches new daily column: "The Big View" to give a more detailed analysis on important global issues. Read More

• JPMorgan Appoints M&A Heads, Haidee Lee and Carsten Woehrn, to co-lead M&A for the bank’s strategic investor group. Read More

• Goldman Sachs Appoints David Kamo as Global Head of Financial Sponsor M&A. Kamo’s new role will involve leading the bank’s efforts in working with private equity firms and alternative asset managers. Read More

• November 8-9, 2023, Reuters Next Summit, New York, New York  
• November 29: New York Times’ Dealbook Summit, New York, New York
• November 30: IR Magazine ESG Integration Forum, New York, New York