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D.E. Shaw Investment Calls For Leadership Change At EQT

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 billion, also in cash.

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In another sign of renewed activism in the energy patch, D.E. Shaw Investment Group has called for the Rice brothers to be installed in leadership positions at EQT or for the company to hold an annual meeting in April as a shareholder referendum on the idea. D.E. Shaw supported both the merger between EQT and Rice Energy and a spinoff of midstream assets but last month backed Toby and Derek Rice in their attempt to return to the management team. Last week, it laid out gripes with EQT’s management including wasteful acquisitions, undelivered synergies, and missed capex budgets, and said EQT should consult the Rice team before making layoffs.

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Q3 hedge fund letters, conference, scoops etc

What we'll be watching for this week

  • How will Crescendo Partners and Jamarant Capital react to Stuart Olson’s rejection of a proposal to conduct a strategic review and sell the company?
  • Will EQT hasten its annual meeting date to April, as per D.E. Shaw Investment Group’s request?
  • How will Cruiser Capital respond to Ashland Global’s recent board refreshment promises?

Activist shorts update

Maxar Technologies announced the resignation of Howard Lance from his roles as CEO, president, and director, amid criticism from activist short seller Spruce Point Capital Management. The short seller targeted the company in August, saying its financial reports are confusing and that a deal to buy Space Systems Loral was poorly-timed. Spruce Point also said the company was worthless and its dividend unsustainable. The company denied the accusations at the time and said the report contained a number of inaccurate and misleading claims. Daniel Jablonsky, who served as president of Maxar subsidiary DigitalGlobe, stepped in as chief executive with immediate effect. Maxar shares have dropped 83.5% since Spruce Point announced its position on August 07.

In other news, Aphria CEO Vic Neufeld and Co-founder Cole Cacciavillani plan to transition out of their executive roles in the coming months, but say they will remain on the board and serve as special advisers to Chairman Irwin Simon and President Jakob Ripshtein until a new CEO is appointed. Aphria faced pressure from short sellers Quintessential Capital Management and Hindenburg Investment Research, which launched a joint short campaign at Aphria at Kase Learning's conference on December 3, alleging that the company had acquired worthless assets owned by insiders at inflated prices. Following the announcement of the departures, Quintessential said it was moving on to other projects.

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Chart of the week

The number of Asia-based companies publicly subjected to activist demands between January 01 and December 31 in respective years.

D.E. Shaw Investment Calls For Leadership Change At EQT