Actionable Ideas for Companies and Sponsors

Activists Increasingly Pushing for Strategic Sale or Merger

Corporate clients should place early focus on the targets of activists in their sector, as the bias is shifting to corporate sale as the likely outcome. While activists historically have focused on unlocking the value of subsidiaries via spin-off or sale as well as enhancing corporate efficiencies, activists are increasingly calling for outright sale transactions to capitalize on a market which continues to reward corporate consolidation. In addition, in some cases, activists are taking positions in both the target of their campaign as well as the possible counterparty to the sale or merger. Recent examples include: 1) Whole Foods, which in June was acquired by Amazon for $13.7 billion, had activist Jana Partners (9% stake) recommending sale to achieve the necessary operational improvements more rapidly; 2) Tribune Media, which in May was acquired by Sinclair Broadcast Group for $6.6 billion, had activist StarBoard Value (6.6% stake) recommending potential business combinations; and 3) LifeLock, which was acquired by Symantec Corporation for $2.5 billion in February 2017, had activist Elliot Management (7.6% stake) stating its intention to make an offer to acquire the whole company. Elliott also had 1.9% stake in Symantec at the time of its investment in LifeLock.