DealLawyers.com Blog

This WSJ article says that some recent arrangements between companies and some heavy-hitters in shareholder activism suggest that there may be a peace offensive underway.  Here’s an excerpt:

A new playbook is emerging in the world of shareholder activism, one that calls for quick peace treaties enabling investors and the companies they target to sidestep costly, protracted battles. In the past few weeks, AT&T and Emerson Electric managed to quickly end high-profile activist challenges—at least temporarily—by agreeing to make modest changes. The hedge funds besieging them pledged nothing in return.

People involved in the deals insist they are not “settlements,” the formal arrangements that typically end activist campaigns and impose strict measures on both parties. Such agreements often enable activists to name one or more board directors while preventing them from agitating publicly or waging a proxy fight—and trading in the stock.

The new setups are more like nonbinding handshake agreements, and in the case of AT&T and Emerson merely entitle the activist to recommend or advise on board changes. Emerson has drawn an investment from D.E. Shaw Group, a hedge-fund firm with an activist component that praised a new board member the industrial conglomerate appointed earlier this month.

The article notes that activists “are grappling with subpar returns and eager for the increased flexibility and opportunity to tout a quick victory that the new arrangements afford.” Hmmm. . . AT&T and Emerson are up significantly over their lows for the year, both of which were recorded shortly before these activists went public with their campaigns. Perhaps the activists got the pop they were looking for and have moved on to more attractive prey?

– John Jenkins