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Latest deals happening in high finance
Activist News:
The Wall Street Journal reports that activist investor Starboard Value has acquired a $500 million stake in Autodesk and is pushing for the company to improve profit margins and change its board composition. Following discussions with Autodesk executives about operational and governance concerns, Starboard criticised Autodesk for not disclosing a recent accounting investigation until after the shareholder nomination window had closed. Starboard may take legal action to reopen the nomination window and delay the annual shareholder meeting. Autodesk acknowledged the investigation and asserted confidence in its strategy and governance while maintaining engagement with shareholders. The outcome of Starboard's campaign could significantly impact Autodesk's future performance and governance.
A U.S. judge dismissed Exxon Mobil's lawsuit against activist group Arjuna Capital after Arjuna agreed not to pursue future proxy filings on Exxon's greenhouse gas emissions. This decision, which allows Exxon to refile the case if needed, eased concerns among activists and investors about the suppression of shareholder debates. Exxon argued the lawsuit addressed abuses in the shareholder-access system and stressed the importance of consistent rule application. Arjuna did not comment, but Tim Smith from the Interfaith Center on Corporate Responsibility criticised Exxon's aggressive approach. The lawsuit also initially included the group Follow This, which was later dropped due to jurisdictional issues. The case highlights ongoing conflicts between corporations and activists over environmental issues and shareholder rights.
Toyota Dealership.
Toyota's annual general meeting saw the re-election of Chairman Akio Toyoda and other board members despite concerns over governance and certification test scandals. Proxy advisers had recommended against Toyoda's re-election due to issues with the automaker's handling of these problems and its lack of board independence. However, strong domestic support and record profits aided Toyoda's re-election. While opposition primarily came from overseas investors, a significant drop in support could prompt governance reforms. Toyota also faced recent revelations of further certification test violations, affecting its stock performance.
M&A News:
Vanda Pharmaceuticals Office
Vanda Pharmaceuticals has rejected takeover offers from UK-based Cycle Pharmaceuticals and a revised bid from contract manufacturer Future Pak, stating that both offers undervalue the company. This marks the third rejection of Future Pak's offers. In April, Vanda adopted a "poison pill" strategy to prevent hostile takeovers. Future Pak’s latest offer included an increased cash portion of $8.50-$9.00 per share, plus contingent value rights, while Cycle Pharma’s offer valued Vanda at $466 million. Vanda's board maintains that these offers are not in the best interests of the company and its shareholders.
Penn Entertainment
Boyd Gaming has approached Penn Entertainment with a potential acquisition offer. This interest follows a suggestion from Penn investor Donerail Group, who criticized Penn's investment in online sports betting and recommended a sale of its regional casino assets. Boyd’s interest is fueled by strategic benefits, particularly in overlapping markets, and the recent appointment of Michael Hartmeier to Boyd’s board, who has significant industry experience. Both companies have yet to comment publicly on the potential merger.
Nippon Steel's proposed $15 billion acquisition of U.S. Steel faces opposition from a labour union and the White House. The Australasian Centre for Corporate Responsibility (ACCR), a minor shareholder, and other stakeholders, have raised concerns about increased decarbonization costs due to U.S. Steel's 11 blast furnaces. They urge Nippon Steel to address the acquisition's impact on its climate goals. Nippon Steel plans to share decarbonization technologies, including hydrogen injection, with U.S. Steel and claims this will aid their carbon neutrality efforts by 2050. Despite previous decarbonization cost estimates of up to 5.5 trillion yen ($34.8 billion) by 2050, Nippon Steel has committed $1.4 billion to enhance U.S. Steel's environmental sustainability and aims to use hydrogen injection, carbon capture, and electric arc furnaces to support decarbonization.
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