Welcome Back, Watch List followers! Activists often target corporations with executives entering, or well into their senior years, in hopes of nudging businesses towards a sale, especially if there isn’t a good succession plan in place. (See: HBO’s Succession.)
As such, The Deal looked to relationship mapping service BoardEx, a sister company, to identify companies with older CEOs and found that the fourth-oldest CEO overseeing an S&P 500 corporation is Centene Corp.’s (CNC) Michael Neidorff, at 79. Interestingly, the managed care company was just targeted last week by veteran activist Quentin Koffey, who appears focused for now on long-tenured directors.
Meanwhile, Steven Roth, the 80-year-old CEO of Watch List member Vornado Realty Trust (VNO), is tied for second-oldest chief executive of an S&P 500 company, according to BoardEx. (Berkshire Hathaway Inc.’s (BRK.A) Warren Buffett, the Oracle of Omaha, is 91, while Teledyne Technologies Inc.’s (TDY) Robert Mehrabian is 80).
Read on for more updates below:
Alteryx Inc. – AYX – Alteryx reported third-quarter earnings in line with forecasts after hours on Nov. 2. Shares gained 5.5% on Nov. 3. The company said it would buy Australian company Hyper Anna, which uses artificial intelligence to automate data analysis, on Oct. 7. Terms weren’t disclosed. Co-founder and chairman Dean Stoecker has 53.8% of the vote through holdings of Class A and Class B shares, which would insulate the company from unfriendly overtures.
Barclays plc – BCS – The Financial Times reported Tuesday, Nov. 9, that Barclays appointed Paul Compton, an Australian and former JPMorgan Chase & Co. veteran, as sole head of its investment bank, the first major move by new CEO C.S. Venkatakrishnan to stabilize the institution after the resignation of CEO Jes Staley on Nov. 1. Barclays’s board is likely to come under fire after Staley’s departure — the board had backed Staley while Britain’s financial regulators investigated his relationship with Jeffrey Epstein. Sources said investors likely will call for chairman Nigel Higgins to leave at the company’s next annual general meeting in May. The fact that New York- and London-listed Barclays trades at a discount could also give leverage to an activist.
Bayer AG – FRA: BAYN – Bayer in late May said it was reviewing its U.S. residential lawn and garden business, which could include removing a controversial glyphosate ingredient, after a judge rejected a proposal to resolve future claims that Roundup causes cancer. Other steps to mitigate its risks from future claims include continuing legal appeals, reassessing settlement efforts and creating a website addressing Roundup’s safety concerns. The German company inherited the top-selling weedkiller in its acquisition of Monsanto Co. Bayer’s “downright absurd” market value argues for a breakup, analysts say.
Burberry plc – LON: BRBY – Marco Gobbetti, CEO of the luxury goods company, said he would leave the position at the end of 2021, leading to a sharp fall in the company’s share price that could leave it even more susceptible to an activist. Gobbetti led the turnaround of the trench coat designer, including a focus on full-price sales and strengthening the brand’s presence in China. Burberry’s recovery, however, has lagged its larger rivals. Burberry’s weak rebound from Covid disruption, low earnings multiple and sluggish recovery also may contribute to an activist’s looking for change.
Calavo Growers Inc. – CVGW – Calavo Growers appointed Farha Aslam, managing partner at Crescent House Capital LLC, as interim CFO in June following the departure of his predecessor, Kevin Manion. Aslam was appointed to Calavo’s board on Sept. 8. Calavo announced in a Nov. 17, 2020, investor presentation an initiative to increase board independence, board diversity and sustainable practices, and to pursue strategic bolt-on acquisitions for long-term growth. The company recently received a series of negative votes for seven directors.
Catalent Inc. – CTLT – Catalent’s $1 billion acquisition announced Aug. 30 of gummies, soft chews and lozenge supplements maker Bettera Holdings LLC from Highlander Partners LP was unexpected and may not sit well with the buyer’s investors, Jefferies LLC analyst David Windley said in a note. The contract pharmaceutical manufacturer’s investors instead prefer the company’s biologics lean, which involves cell-line, cell therapy and viral-based gene therapy development and manufacturing and is Catalent’s largest segment by revenue, Windley said. The Bettera deal is also expensive, he added. Third Point LLC reported in August that it owns a 1.2 million-share position, or 0.72% of shares outstanding.
Coterra Energy Inc. – CTRA – Cimarex Energy Co. and Cabot Oil & Gas Corp. on Oct. 1 completed their merger, forming Coterra Energy Inc. In July, The Deal reported that a combined Cimarex and Cabot could attract pressure from activist investors in the future if commodity prices fall and the pair do not deliver on their promised improved shareholder returns.
Denbury Inc. – DEN – Denbury reported net income of $82.7 million on Nov. 4 for its third quarter, after it reported a loss in the same period a year earlier. Argus Media reported Oct. 26 that Japan’s Mitsui Group and Denbury have started jointly evaluating potential opportunities in the U.S. to develop “carbon negative” oil projects that utilize CO2 from carbon capture and storage. On Sept. 1 Denbury said it reached an agreement to transport and store carbon dioxide captured from Mitsubishi Corp.’s proposed ammonia project on the U.S. Gulf Coast. The Plano, Texas-based company could be an attractive target for an oil major looking to offset carbon emissions.
Elementis plc – LON: ELM – Chemicals company Elementis has rejected two takeover offers in the past year, and The Deal has learned it has been a target since at least 2006. Chemicals industry sources familiar with the company expect an activist could take aim at Elementis given the recently rebuffed offers. Other possible suitors include fellow U.K. chemicals business Synthomer plc.
Gildan Activewear Inc. – GIL – Gildan on Nov. 4 reported record results for the third quarter driven by “the ongoing recovery in demand,” according to CEO Glenn Chamandy. The clothing company’s shares are up 51% in 2021. On Aug. 30, Gildan said it published its 17th Environmental, Social and Governance report. Glenn Welling’s Engaged Capital LLC, which often pushes for M&A, reported Aug. 16 that it continued to own about a 1% stake in the clothing company. On May 6, Gildan said a majority of shares voted against its executive pay plans.
Gilead Sciences Inc. – GILD – Gilead on Oct. 28 reported third-quarter revenue of $7.4 billion, up 13% year over year, and diluted earnings per share of $2.05, compared with 29 cents in the year-ago period. Sarissa Capital Management LP continued to own 2.7 million shares in the biopharmaceutical company as of June 30, according to the hedge fund’s Form 13F filing on Aug. 16. At Gilead’s annual meeting on May 12, a shareholder proposal requesting the company’s chair be an independent director received the vote of 34.6% of voting shares.
LivaNova plc – LIVN – Sachem Head Capital Management LP disclosed in a 13F filing on Aug. 13 that it owned 890,000 LivaNova shares, about 1.8%, as of June 30, and Eminence Capital on Aug. 16 reported ownership of 1.65 million shares, or 3.4%, at the end of June, up from 1.39 million shares at the end of March. LivaNova on Nov. 3 reported sales from continuing operations of $253.2 million for the third quarter, up 5.5% on a reported basis and 5% on a constant-currency basis from the 2020 period. The London-based company reportedly received an unsolicited takeover bid in February from British private equity firm Permira.
MEG Energy Corp. – TSE: MEG – Canadian oil sands producer MEG Energy once spurned a merger proposal with competitor Husky Energy Inc., which went on to sell itself to larger Canadian oil company Cenovus Energy Inc. (CVE) in October 2020. As the three-year anniversary of that would-be deal passes and the ESG movement places an increasing emphasis on the controversial development of Alberta’s oil sands region, the likelihood increases that an activist investor may target MEG Energy with the intention of pushing it to add ESG experience to its board and consider corporate sales that would allow it to better participate in the energy transition.
National Healthcare Corp. – NCH – National Healthcare on Nov. 5 said net operating revenue and CARES Act income for the three months ended Sept. 30 totaled $276.7 million, up 10.4% from the year-ago period. The GAAP net loss attributable to the nursing home company for the quarter was $3.35 million, versus net income of $12.85 million in the same period last year. National Healthcare has to appoint at least one female board member by the company’s 2022 shareholders’ meeting. The company was targeted in 2020 by the California Public Employees’ Retirement System over a lack of diversity.
Paramount Group Inc. – PGRE – New York-based Paramount Group may have rejected a $2.2 billion unsolicited bid from activist investor Bow Street LLC last year, but the office property owner still could be snapped up as real estate M&A rebounds. Morgan Stanley pegged the company as a potential beneficiary of industry consolidation in 2021 in a December analysis, suggesting the possibility that other suitors could emerge. Separately, Paramount reinstated director Mark Patterson to its board despite a 56% shareholder vote against his reelection at the REIT’s annual meeting in May — a move that could invite shareholder activism.
Premier Inc. – PINC – Premier on Nov. 2 reported net revenue of $365.1 million for the first quarter of fiscal year 2022, up 5% year over year, and net income of $121.3 million, down 23% from the year-ago period. The healthcare analytics and supply chain services company said Sept. 7 it has reduced the size of its board to 11 directors from 15, effective Aug. 31. In May, Premier president Michael J. Alkire added the CEO title, succeeding Susan DeVore at the helm of the company. Last year, Premier eliminated its dual-class ownership structure.
Qualcomm Inc. – QCOM – Qualcomm on Nov. 4 reported fourth fiscal-quarter earnings and revenue that topped forecasts and raised guidance as demand for 5G phones rose. The company said Oct. 13 that it would pay a 68 cent quarterly dividend, a day after the chipmaker announced a new $10 billion stock buyback plan. Qualcomm and New York investor group SSW Partners said Oct. 4 that they would buy automotive technology company Veoneer Inc. for $4.5 billion, outbidding Magna International Inc. (MGA).
Quotient Technology Inc. – QUOT – Quotient Technology’s shares plunged on Nov. 3 after it reported a loss of $7.8 million on revenue of $135.9 million in the third quarter. The technology company also reportedly said it is ending its partnership with Albertsons Cos. (ACI). Quotient was targeted with a lawsuit in Delaware by former investors in a business it acquired in 2018, SavingStar Inc., according to a Bloomberg Law report issued in August. Activist fund Engaged Capital on Aug. 16 reported cutting its stake in Quotient in the second quarter to 1.6 million shares, from 1.9 million shares in the first quarter.
Unilever plc – UL – The consumer company may face pressure from Nelson Peltz’s activist fund, Trian Fund Management LP, to split the business or sell off fast-growing divisions in developing regions such as India and Indonesia. In a emailed query from The Deal, Trian declined to comment on the speculation. Peltz left the board of Procter & Gamble Co. (PG) after its Oct. 12 annual meeting. Unilever on April 29 said it has begun operationally separating a number of smaller beauty and personal care bands that together generated revenue of around €600 million ($694 million) in 2020. The company also said it was progressing on the separation of its tea business.
Vornado Realty Trust – VNO – Vornado Realty Trust CEO Steven Roth, at age 80, is tied for second-oldest CEO at any S&P 500 company, according to an analysis compiled by relationship mapping service BoardEx, a sister company to The Deal. (Teledyne Technologies CEO Robert Mehrabian is also 80, and Berkshire Hathaway’s Warren Buffett is 91.) Vornado’s planned tracking stock spinoff of its Penn District assets announced in April may not be well received by investors, leaving the door open to an activist to launch a campaign or pen a letter in opposition. Jim Mitarotonda’s Barington Capital Group LP, which has targeted REITs before, owns a 0.01% Vornado stake.
Whiting Petroleum Corp. – WLL – According to Semler Brossy, only about 23% of shares backed Whiting Petroleum’s “say on pay,” ranking it as the seventh-worst performer on executive compensation approval listed by the advisory firm. The Denver-based oil company is an attractive candidate for a merger with peer Oasis Petroleum Inc. (OAS). With consolidation picking up in the Williston Basin and ESG concerns picking up among E&P companies — where Whiting scores poorly — the company could be prone to activist involvement if its growth plans don’t work out.