August 3, 2020

Antitakeover: Evaluating Your Defenses

This Bass Berry blog says that it’s a good time for companies to take a hard look at their defensive profiles.  Here’s the intro:

As public companies continue to navigate the ongoing economic upheaval caused by the COVID-19 pandemic, opportunistic activist investors may find the resulting economic conditions conducive to accumulating significant ownership positions, agitating for changes in corporate strategy and management, and pursuing public activist campaigns.

Although the number of overt activist campaigns were down during the primary 2020 proxy season, as the annual meeting season for most public companies took place during the initial months of the pandemic lockdown, the third and fourth quarters generally tend to see an increase in activist activity as hedge funds make initial preparations for the following year’s proxy season. Given these circumstances, this is an opportune time for public companies to make preparations by reviewing and evaluating their defensive profiles.

The blog provides a practical guide to evaluating a company’s defensive posture. Topics addressed include defensive measures relating to shareholders meetings & the board of directors, “shark repellant” charter provisions, issues surrounding the process by which organizational documents may be amended, and “dilution defenses,” such as rights plans and blank check preferred stock.

John Jenkins