The two most important days in your life are the day you are born and the day you find out why.”—Mark Twain
BOSTON | BY SVEA HERBST-BAYLISS Wed May 13, 2015 4:18pm EDT
May 13 Corporate America may find fresh courage to say “no” to deep-pocketed activist investors after the chief executive of DuPont, one of the world’s biggest chemical companies, beat back the year’s most prominent challenge to management on Wednesday.
Nelson Peltz, who runs the $11 billion Trian Management hedge fund, was dealt a rare setback when investors, including pension fund Calpers, sided with DuPont CEO Ellen Kullman to rebuff his attempt to win four board seats and press the company into breaking itself up.
The outcome underscores how a CEO with strong allies among its largest investors can fend off activist advances, and could provide a model for how corporate leaders handle future battles waged by hedge funds such as Pershing Square Capital Management, Starboard Value, and ValueAct.
“Companies will be more emboldened by this and more willing to stick to their convictions and strategies, and not necessarily rush into a negotiated settlement,” said Damien Park, managing partner at consulting firm Hedge Fund Solutions, which helps companies defend against activists.
Analysts said Kullman’s open dialogue with big shareholders, including Vanguard, State Street and BlackRock, was instrumental in DuPont’s victory over Peltz, who had the support of prominent shareholder advisory firm ISS.
In the past, companies seeking to avoid the cost and distraction of proxy battles have tended to accept agitators onto their boards before a full vote by shareholders. DuPont spent $15 million trying to fend off Peltz, whose fund spent $8 million on its campaign, according to each side.
For example, Peltz’s partner Ed Garden joined the Bank of New York Mellon board last year, and Third Point’s Daniel Loeb got three seats on auction house Sotheby’s board. This year Pershing Square negotiated two board seats at animal health company Zoetis shortly after buying a $2 billion stake.
Companies that have taken a harder line have often been stung. In a recent example, Jeff Smith’s Starboard last year succeeded in replacing all 12 directors at Darden Restaurants, which owns Olive Garden, prompting analysts to say boards no longer have the luxury of ignoring investors who call for spinoffs and buybacks.
Wednesday’s loss for Peltz could reshape that thinking, by showing that CEOs who have established support among big investors for their management plans have a chance at blocking activists in some cases.
“One takeaway is that while activists on average are successful, they are not successful in each and every case,” said Darren Novak, a managing director at Houlihan Lokey who advises companies in activist shareholder situations.
Harvard Business School professor William George said Peltz’s loss “will give CEOs the courage to stand up to activists who advocate short-term actions that aren’t in the company’s best long-term interest”.
To be sure, advisers and analysts said companies with clear management flaws still offer the activist industry fertile ground to force change.
“There are lots of broken companies out there that activists can focus on, and this has got to be viewed as a unique situation where Peltz went after a company that’s well run but he thought he could run better,” said Wes Hall, founder of advisory firm Kingsdale Shareholder Services. “Everyone has won some (corporate battles) and lost some. Life goes on.”
Dedicated activist hedge funds boasted record inflows in 2014 of $14.2 billion, and the roughly 70 funds in their ranks hold a combined $119.2 billion in assets, Hedge Fund Research data show. (with additional reporting by Lewis Krauskopf and Nadia Damouni in New York, Swetha Gopinath in Bangalore and Tom Hals in Wilmington; Editing by Richard Valdmanis and Peter Galloway)
SEE IT ALL:
I am actively looking to build relationships with Real Estate Investors and Owner / Users for Phoenix – Scottsdale – Tucson – Maricopa County – Pima County – Pinal County – Cochise County – Santa Cruz County –Yavapai County – Gila County – Arizona , USA
WHY PHOENIX ARIZONA : ???
Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix.
View my listings and my profile at:
Investors and owner/users need to really know the market before making a move in commercial investment properties as the market has a lot of moving parts today. What’s going on socio-economically, what’s going on demographically, what’s going on with location, with competing businesses, with public policy in general — all of these things affect the quality of your commercial properties/investment properties. Therefore, you need a broker who understands commercial properties. Please go to my web-site and get all the newsflashes and updates in Commercial Real Estate.
Check out my professional profile and connect with me on LinkedIn.
Follow me on Facebook:
Follow me on Twitter:
Follow Me on Google+
Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. I am also a commercial land specialist in Phoenix and a Landspecialist in Arizona. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail email@example.com or call me on my cell 520-975-5207 or Office:480-948-5554
Walter Unger CCIM
Associate Broker, West USA Commercial Real Estate Advisers
7077 E. Marilyn Road, Bldg 4, Suite 130
Scottsdale, AZ 85254
Office : 480-948-5554
View my listings and my profile at:
a little about me and my expertise – video
Delivering the New Standard of Excellence in Commercial Real Estate
- Commercial Real Estate Scottsdale
- Commercial Real Estate Phoenix
- Commercial Real Estate Arizona
- Commercial Investment Properties Phoenix
- Commercial Investment Properties Scottsdale
- Commercial Investment Properties Arizona
- Land Specialist Arizona
- Arizona Land Specialist
- Land Specialist Phoenix
- Phoenix Land Specialist
- Land For Sale Phoenix
- Land for sale Arizona
- Commercial Properties For Sale Phoenix
- Commercial Real Estate Sales Phoenix
- Commercial Properties Phoenix
- Commercial Properties Arizona
- Commercial Land Specialist Phoenix
- Commercial Land Phoenix
- Multifamily land Phoenix
- Retail Land Phoenix
- Industrial Land Phoenix
- Land Commercial Phoenix
- Land Retail Phoenix
- Land Industrial Phoenix
- Land Multifamily Phoenix
- Industrial Land for sale Phoenix
- Land Industrial
- Investment Real Estate
Disclaimer of Liability
The information in this blog-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.