The Special Situation Report #11: 4/3 Roundup

Summary of the Week in Special Situations

Apr 03, 2022

It’s the season for annual general meetings, and with activist investors increasingly emboldened, expect a lot of news relating to proxy battles in this week’s Report.

For example: Kohl’s is busy fending off a proxy contest from Macellum Advisors as Goldman Sachs runs a simultaneous process to evaluate takeover bids. Carl Icahn nominated two directors to the board of Kroger – adding to his ongoing proxy contests with McDonald’s and Southwest Gas (Icahn previously announced settlements with Delek and Dana in Q1). And Hasbro rejected a settlement offer from Alta Fox Capital, likely setting up a shareholder vote.

Global M&A fell to the tune of double digits in the first quarter, but 90% of the drop in domestic deal volume was attributable to a decrease in SPAC merger activity, according to data published in Barron’s. Evolving dynamics have created pockets of high activity, like in community banks, UK-based companies, real estate, and gaming.

Your weekly update on special situations is below. I hope to see you again next week; same time, same place.

Update on Developing M&A

Alnylam Pharmaceuticals (ALNY) gained on speculation after canceling an investor event (Seeking Alpha)
Kohl’s (KSS) sent a sharply worded letter to shareholders criticizing activist Macellum; indicated diligence with bidders is ongoing (Letter)
Pearson (PSO) rejected a third proposal from Apollo (APO), ending the private equity firm’s pursuit (Filing)
Quotient Technology (QUOT) announced a CEO transition plan, governance improvements, and plans to review shareholder value creation with a financial advisor (Press Release)
Ted Baker (LSE: TED) rejected two takeover bids by Sycamore (Sycamore has until April 15th to submit a revised proposal) (Filing); second activist investor subsequently emerged (Filing)
Toshiba (TOSYY) gained as Bain Capital cut a deal with Toshiba’s top shareholder and mulls a takeover approach (Reuters)
Tyme Technologies (TYME) hired Moelis and announced the exploration of strategic alternatives (Press Release)

Update on Shareholder Activism

Adagio Therapeutics (ADGI) activist Mithril Capital submitted notice of a forthcoming proxy battle and announced a partnership with fellow 13D filers M28, Polaris, and Adimab (Filing)
Aerojet Rocketdyne’s (AJRD) CEO and independent directors issued an update on the proxy fight with the company’s executive chair (Press Release)
Allot (ALLT) investor Lynrock Lake filed a 13D to supersede its schedule 13G amid Allot’s proxy battle with activist Outerbridge Capital (Filing)
Athira Pharma (ATHA) activist investor Richard Kayne nominated himself and the former CFO of Novartis to the board, citing poor governance and the need for new leadership (Filing)
FedEx’s (FDX) Founder, Chairman, and CEO Fred Smith says company leadership changes had no ‘activist impetus’ (MSN)
Galaxy Gaming (GLXZ) investor Tice Brown served a letter to the board criticizing certain governance practices and nominating himself for director (Filing)
Guess? (GES) activist investor Legion Partners filed a definitive proxy to solicit votes against directors Paul Marciano and Maurice Marciano (Press Release, Presentation)
Hasbro (HAS) turned down a settlement offer from Alta Fox to have only one of its nominees added to the board (Reuters, Twitter); Alta Fox’s Connor Haley would not be surprised if a hostile bidder emerged (Yahoo)
Kingsway Financial Services (KFS) activist investor Joseph Stilwell filed a 13D; his entities now own over 30% of the company (Filing)
Kroger (KR) drew the ire of Carl Icahn for the Company’s approach to wages and animal welfare; he nominated two directors to the board (Filing)
Pennsylvania Real Estate Investment Trust (PEI) announced an agreement with investor Cygnus Capital (Press Release)
Republic First Bancorp (FRBK) activist investor George Norcross filed suit in regards to his unfulfilled books and records request (Filing)
Southwest Gas (SWX) continued its tussle with Carl Icahn, issuing a sharp letter to shareholders amid a planned equity fundraise and a proxy battle from Icahn
US Foods (USFD) filed a preliminary proxy statement and appointed two new directors to the board amid a proxy battle with Sachem Head (Press Release)
Ventas (VTR) activist investor Land & Buildings filed a definitive proxy nominating Jonathan Litt to the board (Filing)
Zendesk (ZEN) activist investor Jana Partners urged the Company to set a date for its annual general meeting (Filing)

Update on Other Special Situations

Ascent Resources is preparing for an IPO as a potential merger with Gulfport Energy (GPOR) is sidelined for now (Reuters)
Change Healthcare (CHNG) is in advanced talks to sell its ClaimsXten business amid regulatory pressure on Change’s sale to UnitedHealth Group (UNH) (Bloomberg)
Crane (CR) announced a plan to separate into two independent public companies through a tax-free spinoff to shareholders, highlighting an above-average valuation discount vs. peers (Press Release, Investor Presentation)
Creatd (CRTD) announced plans to spin off its Web 3.0 assets into a separate publicly-traded entity (Barron’s)
Lee Enterprises (LEE) has been slashing jobs following its rejection of a hostile takeover bid (Axios)
Tabula Rasa (TRHC) is exploring options for its PrescribeWellness medication therapy management business (Axios)
Walgreens Boots Alliance (WBA) confirmed its strategic review of the Boots business is ongoing (Filing)

Announced M&A

Target / Acquirer – Transaction Enterprise Value

Consumer / Retail

Etain / RIV Capital (TSX: RIV) – $247mm (Press Release)

Financials

Apollo Bancshares / Seacoast (SBCF) – $160mm (Press Release)
Bank of Jackson Hole / National Bank Holdings (NBHC) – $230mm (Press Release)
Charter Bankshares / Nicolet Bankshares (NCBS) – $158mm (Press Release)
Manning & Napier (MN) / Callodine Group – $148mm (Press Release)
Randolph Bancorp (RNDB) / Hometown Financial –$147mm (Press Release)
Segmint / Alkami Technology (ALKT) – $136mm (Press Release)

Gaming, Gambling, Lodging & Real Estate

Andermatt-Sedrun Sport AG / Vail Resorts (MTN) – $160mm (Press Release)

Healthcare

LHC Group (LHCG) / UnitedHealth Group (UNH) – $6.4bn (Press Release)

Industrials

Neenah (NP) / Schweitzer-Mauduit (SWM) – $1.2bn (Press Release, Presentation)

Technology, Media & Telecommunications

Minit / Microsoft (MSFT) (Press Release)
Nielsen (NLSN) / Elliott Management & Brookfield (BBU) – $15.8bn (Press Release)
Poly (POLY) / HP (HPQ) – $3.3bn (Press Release, Presentation)
RE2 / Sarcos Technology and Robotics (STRC) – $100mm (Press Release)

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