Trian Partners had long been expected to seek a board seat at Procter & Gamble, and yesterday’s announcement of its nomination of Nelson Peltz confirmed that objective. The activist still claims to want to avoid a proxy fight but as at DuPont two years ago, it will pull out all the stops to get Peltz in the boardroom, where he will establish a new route for information to reach directors, push for non-executive sessions and, judging by a presentation released yesterday, demand an overhaul of the Cincinnati-based company’s operating divisions and devolve responsibility for budgets. Trian has tried to keep the focus even narrower and more cordial than at DuPont: one nominee, no criticism of CEO David Taylor, an offer to put the vanquished director back on the board. The months ahead will put pressure on that accord.
Passive Investing ETFs Account For 6% Of Market But Active Managers Still Rule
The fight, which could culminate in October, offers two further challenges for Trian. As the largest proxy contest by a target’s market cap, Trian will have to spend millions of dollars (although with $3.5 billion invested its returns could be significant). More critical will be the test of its credibility. After losing the DuPont fight, Trian set about wooing index funds and talking about its strategy widely – an effort that has been building up to this moment.
What we'll be watching for this week
- Could more congressmen call for an investigation of Amazon’s investigation of Whole Foods Market after David Cicilline argued for a House subcommittee to take a deeper look?
- Might West Face Capital be reading the runes at FirstGroup’s annual meeting, with a look to pushing for a spinoff of the transport company’s North American operations?
- Will South Africa’s Allan Gray complete a victory over Group Five, having forced directors to resign ahead of a proxy contest.
- Does the departure of BNY Mellon CEO Gerald Hassell portend weak earnings, when the bank reports on Thursday?
Short update
Spruce Point Capital Management is keeping the faith in its short bet against Gentex despite the stock recovering strongly since the activist published its short report. They had been untroubled in January by J Capital Research’s criticisms of its accounting processes but have trended downward since then. Friday’s earnings may give management the platform to respond to Spruce Point’s more detailed claims.
With competitors rapidly teaming up with big electronic giants - including recent acquisitions of Harman, Mobileye and Ficosa, Spruce Point reckons that Gentex's technology could be left behind. Guarding against acquisitions is a risky business for short sellers, but founder Ben Axler told Activist Insight in a phone interview Friday that there were "high hurdles to clear" for anyone interested in buying Gentex, citing uncertainty over the company's succession plan, the depth of management and financial issues raised by the short seller in its report.
Article by Activist Insight
