There’s shareholder activism…
City institutions have catapulted a rebel investor into the chairmanship of one of the UK’s largest asset managers in a bold act of shareholder activism. Investors in F&C Asset Management, which manages £105bn of assets for 3m savers, voted overwhelmingly to oust Nick MacAndrew, chairman, and install Edward Bramson, ending a two-month battle between the two sides.
… and there’s shareholder activism…
Elliott Associates, the $17bn US hedge fund, has called for the resignations from the board of the chief executive and chairman of Actelion, the Swiss biotechnology company, in a push for a sale of the company…
The board had made “little apparent progress” in addressing concerns about Actelion’s “strategic direction and corporate governance” the hedge fund said, adding that the company’s stock market valuation was as much as 50 per cent below where it could be.
As regular readers of FT Alphaville’s Markets Live know, the Swiss biotech company has been the subject of persistent takeover speculation since the autumn. Amgen, Abbott Laboratories and Bristol-Myers Squibb have all been rumoured at one time of another to be interested.
So much so, that Actelion is probably one of the most crowded long trades in Europe.
This in itself is interesting.
Such is the paucity of deals on this side of the Atlantic that the big merger arbitrage funds (and prop traders for that matter) are being forced to take “pre-event” positions in synthetic takeover situations.
The fact that Elliott is now trying to remove Actelion’s management really isn’t that surprising.
Indeed, the FT’s M&A editor Lina Saigol as good as predicted it would happen back in November:
The funds playing Actelion, however, are trading on synthetic bid activity, which shows just how desperate they are.
The anticipated recovery in dealmaking has yet to materialise, and with few solid deals to trade on, they are playing rumours and speculation instead. As the old saying goes, every fund turns activist when they own the stock and nothing is happening.
Having taken positions in Actelion early when no bid is on the table, they need a way out of their trades, and that means pushing for a sale.
If they succeed, this could be the new shape of activism.
If a Swiss biotech company can be a target, then a range of underperforming companies need to plan how to avoid similar treatment.
Quite.
And what’s interesting here is that Elliott isn’t putting forward an alternative strategy for the company (which it says is seriously undervalued) — it just wants Actelion sold to the highest bidder as soon as possible and to hell with the consequences for jobs etc.
Subtle this is not.
As such, Actelion management could therefore be forgiven for asking themselves exactly what they have done wrong. They didn’t put the business up for sale and as far as we know didn’t solicit bids — although Elliott claims they have frustrated a possible offer.
But that won’t help the chairman or chief executive of Actelion keep their positions.
At pixel time shares in Actelion were 4 per cent higher at SFR 54.60.
The full Elliott letter below:
Update: 16.47 (GMT). Actelion responds.
Actelion response on recent shareholder communication ALLSCHWIL/BASEL, SWITZERLAND – 04 February 2011 -
On behalf of the board of Directors of Actelion Ltd (SIX: ATLN), the Vice Chairman, Mr. Joe Scodari, issued today a letter response on recent public communication made by its shareholder Elliott Advisors (UK) Ltd.
Thank you for your letter dated February 3rd 2011.
As you know, the Board of Directors (“Board”) of Actelion welcomes the opportunity to exchange views with its shareholders, which is why, following your previous letter dated 21 December 2010, our Vice-Chairman, Joe Scodari, agreed to a meeting with you on Tuesday, 25 January 2011.
At this meeting you provided useful background regarding your recent decision to start investing in our company in October 2010 (after the rumors regarding an offer for the company) and you set out your concerns and suggestions, which you have reiterated in the above-referenced letter. At that time, we agreed to review such suggestions with the Board in order that your input could be fully considered as management and the Board continuously evaluates the best path for the company and all of its shareholders.
Finally, we would like to clarify that the Board is well aware of its obligations to act in the best interest of the company and its shareholders, and has not received any offer to acquire the company.
Related link:
Actelion chiefs stick to independent line – FT