What you say to an activist shareholder can and will be used against you in a court of law.
That was one of the messages from panelists at the Tulane’s Corporate Law Institute conference in New Orleans on Thursday.
Speaking about activist shareholders on a panel titled “Barbarians at the Ballot Box,” Joele Frank — PR guru and founder of Joele Frank, Wilkinson Brimmer Katcher — warned people: “If someone with a 203 area code calls you, call them back very carefully.” The 203 area code refers to a part of Connecticut rich with hedge funds.
“Whatever you say to an activist can and will be used against you in a 13D filing to the SEC,” Frank said.
The panelists also discussed the cautionary tale of Embarcadero Technologies, whose chief financial officer once used expletives in conversation with activist Robert Chapman. Chapman, who said it was “inappropriate and inadvisable” to use such “blasphemy to a shareholder who owns 9.3 percent of your company,” went on to quote the CFO in a 13D filing.
Chapman Capital went on to demand that Embarcadero’s board of directors maximize shareholder value via a change-of-control transaction, essentially asking for an immediate sale.
Also of interest were the dynamics between two panelists who had squared off against each other just last year. Roy Katzovicz, general counsel for Pershing Square Capital Management, was on the panel. Pershing Square had opposed the sale of Ceridian Corp to Thomas H Lee Partners and Fidelity National Financial. Ceridian had hired Frank’s firm.
Earlier in the day, Mark Shafir, co-head of global M&A for Lehman Brothers, said investor activism was on the rise and predicted an increase in hostile activity in the coming months.
Activist investors take positions in companies they think are underperforming and call for change, often including a sale of all or part of the company to increase shareholder value. If they feel their concerns are unheard, they can go further by nominating their own director candidates in a proxy fight. Chris Young of RiskMetrics, also on the panel, described them as “value investors on steroids.”
(Reporting by Jui Chakravorty)
Trackback
2 comments so far
Why shouldn’t corporate officials be responsible for what they say about the companies they represent? This notion that it’s ethical to mislead shareholders is somewhat dubious. And sometimes activist shareholders are a good thing. A group of shareholders wanted to replace some of the current Directors of The Bear Stearns Company because they felt the firm was making bad decisions. If the activist shareholders would have been successful, Bear Stearns might still be around. Instead, the shareholders were left with Directors, including members of the management team, who were more interested in selling off their own shares in the sinking company.
- Posted by NewsVisualJUST A THOUGHT
This issue has been bothering for a while now. Bear Stearns collapse is not a sudden issue just happened over night or over the weekend. This matter requires some thorough investigation, not just to its roots only but also to the end result to this deal, which seems to me a deal done in haven. Do not give us such scare tactics by saying that a melt down could have happened over the weekend if nothing is done. The truth is that someone or a group of people have benefited a great deal and pocketed millions of Green into themselves and all what we get scare tactics.
Are you telling me that one company collapse would actually make the whole economy of 250 or more millions of American, hundreds of thousands of American companies and vast resources of land and wealth will be wiped out. Who you kidding. This is not a third world country. This is America. We are not a bunch of cowherds that where ever you steer us, taking advantage of a situation, we will turn and believe its face value. Is this a weak country that far that our existence as a nation dependent on some companies and its crappy management! Is this country financial structure dependent on one or two companies? Who are you trying to fool here.
How come a soon as Bear Stearns collapse as you want us to believe over the weekend another company JP Morgan comes to the rescue to buy it? How JP Morgan first knew about what will happen to Bear Stearns that morning and be that fully prepared and ready to offer to buy it? Is it by sudden they knew that Bear Stearns is going down or someone inside already knew that this is going to happen and such information passed to others? How come JP Morgan is the only company who wants to buy this so-called bad deal? Why we do not put Bear Stearns on the block for the highest bidder? It might be other company or even a group of companies want to get into the action and acquire a piece of the pie.
Why the collapse as it is called happened suddenly during the weekend, so to peak, so shareholder will have the chance to recoup his or her losses and sell their shares while they were trading in the 30’s? Why this collapse did not happen a week or a month earlier was it already planned?
Why this deal get that much attention from the official to make this purchase? Why not let these officials who want to help the deal and poured in such some of taxpayers money run the company them self instead? Why JP Morgan wants this deal so bad that they up their offer five folds in a matter of week? Why? Why? Why?
Someone or some entities are getting a huge some of green and the rest of us just believe the prime mortgage melt down is the cause for all our problems. How foolish is that.
- Posted by fahad