7 Hostile Takeovers, Corporate Disputes And Good Old Spats That Are Livening Up Boardrooms (And Newsrooms)
The past several months have given us some real boardroom dramas.
And according to Bloomberg there have already been four unsolicited or hostile bids this year in the mining sector alone. But these skirmishes can also be seen in the retail, energy and real estate sectors.
Here are seven of the more interesting battles for control, currently underway in the corporate world.
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In January Goldcorp launched an unsolicited, $2.64 billion ($2.94 billion Canadian) cash-and-stock takeover bid against Montreal-based Osisko Mining (TOR: CA:OSK) – a mid-tier gold producer that focuses on the acquistion, exploration, development and mining of gold properties. Osisko currently operates the Malartic Mine in Quebec Province. It also has projects in Ontario and outside of Canada, in Mexico.
In a February letter, Osisko's board of directors recommended the company shareholders reject Goldcorp's hostile takeover bid.
“The Osisko Board determined that the Goldcorp offer fails to adequately compensate you for the strategic value of Osisko’sworld-class asset base,” said the letter, “the significant upside potential of Osisko’s Canadian Malartic Mine, or the increased risk inherent in Goldcorp shares, which represent more than half of the consideration on offer.”
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Landbridge Group/Westside Corporation
In what The Wall Street Journal called “a rare example of a Chinese company turning hostile with a takeover attempt,” the Shandong Landbridge Group recently made an unsolicited bid for Australia's WestSide Corp. for $144.6 million ($159.8 million Australian).
Landbridge has reportedly offered Westside 32 U.S. cents (36 Australian cents) per share. The company intends to make a takeover bid for all shares in WestSide for a cash consideration of A$0.36 (US$0.32) per share (WestSide produces coal and gas.)
In a press statement, the company said its board was reviewing the bid's terms and conditions, and advised its shareholders to take no action at this time.
Privately-held Landbridge, which owns a port in China and has holdings in petrochemicals port logistics and real estate, reportedly approached WestSide several weeks ago with an offer – but the company turned down a Landbridge request to go through its books.
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Billionaire investor Sam Zell has joined a campaign to oust the board of office real estate giant CommonWealth REIT (NYSE: CWH).
Last month, Zell and his long-time business partner David Helfand joined forces with Corvex Management and the privately-owned real estate firm Related Companies to gain control of CommonWealth – which The Financial Times says has a $6.8 billion portfolio of office properties in the U.S. and Australia.
According to Bloomberg, Corvex and Related Companies have a combined 9.6 percent stake in CommonWealth. The companies have been claiming “the ownership of an external management firm, REIT Management & Research LLC, by CommonWealth President Adam Portnoy and his father Barry, a company founder, has led to conflicts of interest and underperformance at the REIT.”
Meanwhile, according to the FT report, CommonWealth is calling on the SEC to investigate whether Zell broke its rules, “by not declaring a financial interest when joining the Corvex/Related slate.”
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Another activist billionaire investor is locking horns with a major company. Carl Icahn is calling on eBay (NASDAQ: EBAY), the e-commerce company, to spin off its lucrative PayPal division. But eBay CEO John Donahoe is fighting back.
According to Bloomberg, Donahoe has met with executives at Apple and Netflix, companies Icahn had previously targeted, for advice on how to best handle the situation.
Icahn, who has a 2.2 percent stake in eBay, released a highly-critical letter in February, taking eBay's board to task for what he called its “complete disregard for accountability.”
On March 10, according to E-Commerce Times, eBay rejected two of Icahn's nominees to its board, saying they were unqualified.
Icahn fired back, in an open letter to eBay shareholders, claiming Donahoe's “inexcusable incompetence” had cost them over $4 billion.
But the fight is apparently far from over. “Their response has essentially been to say, we don’t want anyone raining on our parade -- we’re the great EBay,” Bloomberg quoted Icahn as saying. “I never walk away unless there’s a reason to walk away.”
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Abercombie & Fitch/Engaged Capital
The teen apparel retailer Abercombie & Fitch (NYSE: ANF) is coming off a rough 2013 – with declining sales and a series of well-publicized PR and corporate missteps by then-chairman and Chief Executive Officer Mike Jeffries.
Towards the end of the year, the hedge fund Engaged Capital, urged A&F to dump Jeffries or sell itself.
The company said in January it was separating the roles of chairman and CEO, leaving Jefferies in the chief executive position. Engaged Capital then nominated five candidates to the A&F board, in what The Wall Street Journal called “a display of continued frustration” with the company's management.
“We need a board of independent leaders who can set a new direction for Abercrombie,” said Glenn W. Welling, the head of Engaged Capital, said in a statement quoted by The New York Times. “For far too long, stockholders have suffered under the failed leadership of a board that has lacked the independence necessary to properly act as our fiduciaries.”
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Cliffs Natural Resources/Casablanca Capital
Cleveland-based Cliffs Natural Resources (NYSE: CLF), a producer of metallurgical-grade coal and iron ore, is facing off in a proxy battle with Casblanca Capital.
The New York hedge fund, according to Crain's Cleveland, has been calling for a series of changes at Cliffs – including spinning off its non-U.S. Assets and doubling its annual dividend.
In February, Casablanca unveiled its own candidate for company CEO. And in March, in an SEC filing, Cliffs also confirmed that Casablanca had nominated six candidates for election to the company's board of directrors.
Soon after, Cliffs announced it was postponing its scheduled shareholders' meeting in May.
“We are disappointed that Casablanca seems intent on waging a public campaign rather than continuing its private engagement with Cliffs` Board and management team to address the Company`s concerns relating to Casablanca`s proposal to, among other things, break-up the Company” Cliffs said in a press statement.
“Cliffs' Board and management team continues to stand ready to engage with Casablanca to seek to resolve this matter expeditiously, without further disruption to Cliffs.”
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Another proxy war by an activist investor – in this case, Dan Loeb.
His Third Point Capital owns a 9.53 percent stake in Sotheby's (NYSE: BID). Loeb has criticized the venerable auction house's lack of a proper growth strategy, describing the firm as “an old painting in desperate need of restoration.”
In February Leob said he would nominate himself and two business allies to Sotheby's board, for a shareholder election in May.
That announcement, according to New York Magazine, “set off a battle between the Sotheby’s Old Guard and a financier who views artworks as financial assets that trade in a market made by the auction houses.”
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