Economics

Travelport Worldwide Soars 15% On News Of Activism From Elliott

Shares in U.K.-based, New York-listed Travelport Worldwide traded up as much as 15% on news that activist investor Elliott Management is planning to push the company to sell itself. Paul Singer’s hedge fund revealed an 11.8% stake in Travelport and said it may bid for the technology company, which provides back-end support for airlines’ online sales platforms. Elliott said in a regulatory filing Monday that it will “encourage [Travelport] to undertake a strategic review of, and initiate a process to explore, or otherwise consider, the sale of the issuer or certain of the issuer’s businesses or assets, including transactions in which [Elliott] will seek to participate as a purchaser or investor.”

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See 2017 Hedge Fund Letters.

Travelport Worldwide

Elliott has a history of investing in small- and mid-cap technology companies, many of which are taken private within months of the activist’s involvement. In October, Elliott bought Gigamon in the first major deal for its Evergreen Coast Capital unit. Travelport, which has a market cap of nearly $2 billion, has experienced spells of volatility, with its shares trading below its 2014 IPO price of $16 before Elliott’s announcement. If Elliott is successful in buying Travelport, the deal could be the largest leveraged buyout the New York-based hedge fund has led.

What we'll be watching for this week

  • Will investors in U.K.-based GKN tender their shares to hostile bidder Melrose Industries ahead of the Thursday deadline now that Elliott Management has expressed its support of the takeover?
  • Will Kindred Healthcare shareholders approve a sale of the company at the extraordinary meeting Thursday despite activist investor Brigade Capital Management’s opposition to the transaction?
  • What will be Pershing Square Capital Management’s next big investment now that the activist has exited its stake in Nike?

Activist shorts update

German companies are not sufficiently prepared for potential short seller attacks, according to a study conducted by German Federal Association of Corporate Lawyers (BUJ) in conjunction with Corporate Legal Insights (CLI) and commercial law firm CMS. The survey of 102 German legal departments revealed that 82% of respondents deemed short sellers as a non-threat and only 25% of the companies had a system in place to deal with such attacks. The survey concluded German issuers need to improve their efforts to deal with short sellers by creating a defense strategy." Companies likely to face attack should have contingency guidelines in place ready for any attack," Richard Mayer-Uellner, partner at CMS, said. "While short attacks cannot be completely prevented, it is possible to contain the negative consequences."

Short sellers targeted two German companies in 2017 and one company in the first three months of 2018, according to data from Activist Insight Shorts. Viceroy research published the 2018 report against German media company ProSieben but faced backlash from securities watchdog BaFin for failing to notify the regulator of its report ahead of publication.

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Chart of the week

The number of companies Oasis Management has publicly subjected to activist demands since 2013 (14), with the largest proportion (10) being based in Asia, as of March 23.

Chart of the week

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Article by Activist Insight