Shareholder Activism

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The FTC has settled an enforcement action against Third Point Funds and their management company related to their acquisition of stock in Yahoo! Inc.

Based on the FTC’s press release, the funds had acquired shares in Yahoo! that exceeded the requirements for pre-acquisition filings under the Hart-Scott-Rodino Act.  (Filing is currently required prior to acquiring more than $76.3m worth of shares.  Notice of the planned acquisition must be given to the target company prior to filing, potentially providing a very early notification to the target of the acquisition of its shares by an activist.)  To avoid this filing requirement, the Third Point funds relied on the “investment only” exception, which permits investors to acquire up to 10% of an issuer’s stock without observing the HSR Act’s notice and waiting period requirements – so long as the investor’s intent is passive.
Continue Reading Third Point Settles FTC Enforcement Action – Will HSR Serve as Early Notice of Activist Stakebuilding?

In Pontiac Gen. Employees Retirement Syst. v. Ballantine (Healthways) [1], the plaintiffs  alleged that Healthways’ directors had breached their fiduciary duties by entering into a credit agreement with a “dead-hand proxy put” – that is, a provision that provides for an event of default under the credit agreement if the majority of directors on the board are replaced without the consent of the directors in office on the date of the credit agreement (or the consent of successors approved by such directors), without any room for existing directors to approve new directors if they were nominated in connection with a proxy contest. The complaint also alleged that, as lender, SunTrust should be liable for aiding and abetting such a breach of fiduciary duty.  
Continue Reading Recent Developments on “Proxy Puts”

Over 500 M&A practitioners attended the Annual Mergers and Acquisitions in Latin America conference that was held on March 11-13 in Panama City.  The conference was co-presented by the International Bar Association Latin American Regional Forum and the International Bar Association Corporate and M&A Law Committee.  The event attracted lawyers from Latin America, the Caribbean and the U.S. who participated in more than 10 sessions covering diverse subjects of interest for M&A practitioners and business professionals interested in the region.
Continue Reading Highlights from the 2015 M&A in Latin America IBA Conference: Shareholder Activism Today – New Challenges in Latin America Deals

As expected, 2014 proved to be a challenging year for boards.  The legal and economic environments continued to grow more complex, and directors faced increasing scrutiny from investors and governmental authorities in the forms of market reaction, shareholder activism, litigation and enforcement and regulatory activity.  We expect these trends to continue, and boards will need to remain extremely proactive in their oversight and involvement in 2015.
Continue Reading Selected Issues for Boards of Directors in 2015

As widely reported, a vehicle formed by Pershing Square and Valeant Pharmaceuticals acquired just under 5% of Allergan’s shares after Allergan apparently rebuffed  confidential efforts by Valeant to get Allergan to negotiate a potential acquisition.  The Pershing Square/Valeant vehicle then crossed the 5% threshold and nearly doubled its stake (to 9.7%) over the next ten days, at which point it made the required Schedule 13D disclosures regarding the accumulation and Valeant’s plans to publicly propose an acquisition of Allergan.  The acquisition program has raised a number of questions. 
Continue Reading The Schedule 13D Ten-Day Window and Other Issues: Will the Pershing Square/Valeant Accumulation of a 9.7% Stake in Allergan Lead to Regulatory or Congressional Action?

Over the past year, boards of directors continued to face increasing scrutiny from shareholders and regulators, and the consequences of failures became more serious in terms of regulatory enforcement, shareholder litigation and market reaction. We expect these trends to continue in 2014, and proactive board oversight and involvement will remain crucial in this challenging environment.
Continue Reading Selected Issues for Boards of Directors in 2014

Shareholder proposals advocating that corporations provide shareholders with the right to act by written consent in lieu of a meeting reappeared on ballots this proxy season after a hiatus of several years and have won average shareholder support of over 54%. While these proposals are nonbinding and the number of companies with such proposals on the ballot in 2010 is relatively small – a total of 16 companies, according to RiskMetrics – the level of shareholder support is striking and will likely encourage proponents to advance proposals at more companies next year.
Continue Reading Action by Written Consent: A New Focus for Shareholder Activism