Activist Insight Online issued a press release earlier this year with data showing that takeover attempts by activist investors rose 58% between the 12-month periods ending March 22, 2018 and 2019. Indeed, 12 takeover demands were recorded since the turn of the year alone. Now, Ancora Advisors has joined larger activist investors by exploring its first takeover bid, for Southern dining concept J. Alexander’s. The 8.6% shareholder offered to buy the company for $11.75 per share, giving it an enterprise value of $186 million. Although Ancora claims to have access to $6.5 billion in assets, some financing would come from third-party lenders, it said in a letter filed with regulators on Monday.
Ancora Advisors CEO Fred DiSanto explained his belief that J. Alexander’s will continue to be undervalued as long as it is a public company, citing a lack of scale, growth, and liquidity. Ancora also highlighted the failure of J. Alexander’s merger with 99 Restaurants, a chain owned by the company’s former private equity owner Fidelity National Financial. Mario Cibelli’s Marathon Partners Asset Management blocked the deal in 2018. The activist said this, coupled with a consulting agreement that allegedly shows self-dealing and a lack of independence on the board, are reasons to distrust management.
Qualivian Investment Partners Up 30% YTD; Long ORLY Thesis
Qualivian Investment Partners commentary for the second quarter ended July 30, 2020. Q2 2020 hedge fund letters, conferences and more “Short-term investors will accept a 20% gain because they didn’t spend the time to develop the conviction and foresight to see the next 500%.” - Ian Cassell Executive Summary Readers of investment letters fall into Read More
What We'll Be Watching For This Week
- Will Entegris sweeten its bid for Versum Materials in reaction to Merck’s superior proposal or take the $140 million termination fee and walk away?
- How will Select Interior Concepts respond to ADW Capital’s calls for the company to pursue strategic alternatives?
- How will Glass Lewis recommend Comet Holdings shareholders vote after Institutional Shareholder Services backed Veraison Capital’s proposal to elect Heinz Kundert as chairman of the Switzerland-based systems and components manufacturer?
Activist Shorts Update
A judge in Manhattan federal court gave Tesla CEO Elon Musk and the Securities and Exchange Commission (SEC) two weeks to work out their differences following a hearing between the two parties. The market regulator contended in February that Musk violated the terms of an agreement after he tweeted that Tesla will manufacture 500,000 cars in 2019, later revising the data he had provided.
The social media post came after the SEC and Musk reached a settlement in October after the market watchdog initiated a probe into Musk's controversial tweet that he had "funding secured" to take Tesla private. The agency alleged that the executive committed securities fraud with the false statement. The parties settled the charges with an agreement that Musk will pay a $20 million fine and resign as Tesla chairman within 45 days of the deal for at least three years. Tesla also agreed to monitor Musk’s public statements about the company, whether published on Twitter, blog posts, or any other medium.
The SEC in February contended that Musk shared "inaccurate and material" data by tweeting Tesla’s production outlook for the year without a review from Tesla's lawyers. Musk, however, argued, that he had the right to decide whether a post needed pre-approval and said in a statement that he is "pleased" with the judge’s decision.
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Chart Of The Week
In the 12 months ending April 05, 2019, 57 Australia-based companies publicly faced activist board-related demands, up from 52 in the 12 months ending April 05, 2018.