What’s New In Activism – Musk Threatens Lower Price For Twitter
Elon Musk said that a lower takeover price for Twitter Inc (NYSE:TWTR) was “not out of the question,” a week after short seller Hindenburg Research predicted a repricing. The social media company said it was holding the Tesla CEO to the “agreed” $44 billion price tag.
Musk made the comment on May 16, several days after saying he was putting the Twitter take-private on hold over concerns about fake accounts on the platform. He said a large number of fake accounts may be considered “a material adverse misstatement,” which would free him of the contract.
The Tesla CEO would face a $1 billion termination fee if he walks away from the deal, but Twitter has the option to launch a legal battle to force him to close the transaction.
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Activism chart of the week
So far this year (as of May 19, 2022), globally, 53 basic materials companies have been publicly subjected to activist demands. That is compared to 46 in the same period last year.
Source: Insightia | Activism
What’s New In Proxy Voting – Failed “Say On Pay”
Shareholders failed to support the “say on pay” proposal at JP Morgan Chase & Co.’s May 17 annual meeting, with media reporting that only 31% of votes were cast for the proposal.
The unusual rebuke contrasted with more than 90% support in each of the last two years, and a 72% support rate in 2019, according to Insightia’s Voting module.
JP Morgan typically faces strong support for shareholder proposals to improve its corporate governance, particularly arguments for improved special meeting rights or a separation of the chairman and CEO roles.
Other companies to face recent “say on pay” rebellions include Flowserve, HelloFresh, and SS&C Technologies Holdings.
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Voting chart of the week
So far this year, 55% of no-action requests on environmental and social shareholder proposals have been rejected by the SEC, forcing the company to submit the proposal to a vote. This compares to 39% across the whole of 2021.
Source: Insightia | Voting
What’s New In Activist Shorts – Spruce Point v Alpha Metallurgical Resources
Spruce Point Capital Management placed a short bet on Alpha Metallurgical Resources Inc (NYSE:AMR), questioning the coal mining company’s financial statements and reckoning the business is facing “significant financial stress.”
In a May 17 report, Spruce Point said it found staggering evidence of misstated production, revenues, and expenses, up to $690 million of “hidden” debt obligations, overstated cash, and recent cash shortfalls, inflated inventories, and shrinking economic reserves at Alpha.
Alpha’s CEO and Chairman David Stetson accused Spruce Point of being “fueled by an inadequate understanding of coal mining and our reporting requirements.” Management also received a show of support from Lead Independent Director Michael Quillen.
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Shorts chart of the week
So far this year (as of May 20, 2022), six basic materials companies have been publicly subjected to an activist short campaign. That is up from three in the same period last year.
Source: Insightia | Shorts
Quote Of The Week
This tweet from Elon Musk hit out at Twitter CEO Parag Agrawal for refusing to shed light on the number of fake accounts. Read a summary of the story in our Activism section above.
“20% fake/spam accounts, while 4 times what Twitter claims, could be much higher. My offer was based on Twitter’s SEC filings being accurate.” – Elon Musk