Activist Shorts Get Stuck Into SPACs

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Short sellers are the corporate agitators with the biggest impact on the special purpose acquisition company (SPAC) trend, with activists so far preferring to sponsor SPACs than attack them. 

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Activist Short Campaigns Against SPACs

NOVEMBER 22 | There have been 35 activist short campaigns against SPACs that completed mergers since the beginning of 2020, according to new research from Insightia.

The data, featured in the latest issue of Activist Insight Monthly, highlight that shorts are the leading cause of grief for SPACs, a financial innovation that has taken off in the past two years.

Eight activist short sellers have targeted more than one de-SPACed company, and at least one short seller has targeted a pre-merger SPAC, taking advantage of enthusiasm from retail investors sending the stock soaring.

In contrast, no SPACs have been targeted by a long activist campaign. Experts interviewed for the article cite market dynamics and takeover defenses as the likely reason for this, while many activists have also launched their own SPACs.

Activist Insight Monthly lists 18 SPACs recently launched by firms with a history of activism, a non-exhaustive list that highlights the popularity of the tactic.

So far, SPACs have not suffered significant opposition to mergers, with an average of 97% support for these resolutions recorded at shareholder meetings by Proxy Insight Online. Experts say that the structure of many SPACs incentivizes votes for transactions, even if shareholders opt to redeem their shares for capital held by the vehicles.

The publication also includes an interview with activism experts Kai Liekefett and Derek Zaba, partners and co-heads of the shareholder activism defense practice at Sidley Austin, entitled “A greenfield for activism.” The article explores ways in which activism might interact with SPACs over the next few years, including targeting underperforming de-SPACed companies for using SPACs to acquire spinoffs as part of a campaign.

To read the magazine, click here.


About Insightia 

Financial news and data providers Activist Insight and Proxy Insight announced in October 2020 that they had merged to form Insightia, a leader in the field of public company information. Activist Insight was formed in 2012 and offers an extensive range of products including Activist Insight Online, Activist Insight Governance, Activist Insight Vulnerability, Activist Insight Shorts, Activist Insight Monthly magazine, and The Activist Insight Podcast. Proxy Insight has quickly become the world’s leading source of information on global shareholder voting, covering such hot topics as director and auditor elections, “say on pay” resolutions and environmental, social, and governance (ESG) proposals.