Jana Partners And Trian Fund Management Team Up Activism In DowDuPont

Jana Partners And Trian Fund Management Team Up Activism In DowDuPont
By Dow Chemical Company [Public domain], via Wikimedia Commons

In case you missed it

Activism this week (Friday 28th July)

  • A board battle attempt at India’s Alembic
  • Elliott’s billboard campaign at BHP
  • Sandell Asset Management’s letter to Barnes & Noble

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Last Wednesday, we revealed that personal care company Colgate-Palmolive has several activists holding toehold positions in its stock, and argued that it could follow other consumer good giants in facing activist attention after struggling to increase sales and margins.

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What the activism world is talking about

Jana Partners and Trian Fund Management have joined the fray at Dow Chemical and DuPont, adding to the pressure by Third Point Parterns and Glenview Capital over how to split the two companies into three following a pending merger that will combine them into DowDuPont, a $150 billion chemicals giant.

All four investors believe that the material sciences company resulting from the split – which will also give birth to an agricultural chemicals firm and a specialty products firm – should be smaller than currently envisaged by the two issuers. Dow and DuPont recently announced that their plans were being reviewed, and sources cited by the Wall Street Journal suggest changes are likely.

Jana believes Dow is focusing more on the “empire-building or ego-massaging” of its CEO Andrew Liveris than on “creating the right number of spinoff entities and stocking them with the right assets.” Liveris has called Jana's comments “BS,” and said that “noisy” investors are trying to push him to create value in a spreadsheet.

In May, Third Point Partners said units representing around $3.7 billion should be moved from the planned materials company into the specialty products company, and one business worth $300 million should move the other way. Glenview piled in in June, saying that it largely agreed with Dan Loeb's hedge fund.

Third Point and Glenview also agree in their dislike of Liveris. Loeb called for his departure when the merger with DuPont was announced in 2015, and Glenview recently criticized Dow's decision to delay the announced retirement of Liveris until after the completion of the merger. The investment firm argued that part of the reason why it had approved the deal in the first place was the promise that Liveris would step down soon.

Our most-read story last week

Starboard takes on ComScore (Activist Insight Online login required)

What we’ll be watching for this week

  • With the deadline for Enel's tender offer to acquire U.S. energy software provider EnerNOC expiring on Friday, will the Italian company succeed in its takeover despite opposition from Emona Capital and from the owners of Saudi Arabia's Alfanar?
  • Will Saba Capital Management succeed in its proxy contests at three of Clough Capital’s closed-end funds on Thursday?
  • Will Columbia University professor Robert Jackson, an expert on shareholder activism, be appointed to fill the vacant Democrat seat at the U.S. Securities And Exchange Commission?

Short update

Shares in Eros International have lost more than 20% since the announcement of disappointing results on Friday, pleasing short sellers including Alpha Exposure and FG Alpha Management, the hedge fund of GeoInvesting's co-founder Dan David. David had recently warned that the Indian film and entertainment company was taking quite some time to publish its annual report.

Listed on the NYSE, Eros is a rare example of an Indian company in the crosshairs of activist short sellers. Alpha Exposure was first to go after it, with a report published as early as 2015. Glaucus Research Group, Manuel Asensio and Spotlight Research are also among those who have targeted the company over the years.

Both Alpha Exposure and FG Alpha believe the company's stock has yet to reach the bottom. On Friday, Alpha Exposure questioned Eros' posted revenues for its subsidiary Eros Now, and said on Twitter that the Indian firm “would have been better off never reporting and late filing, than coming out with the fiction... they presented today.”

Stat of the week

So far this year (as of July 28, 2017), 427 unique investors have made a public demand of a company globally, down from 458 in the same period last year.

View more trends and stats like these in our 2017 Half-Year Review.

Article by Activist Insight


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