Wildest Campaigns of 2023

Amid depressed financial markets and soaring inflation, activists are placing a heightened focus on company profitability and have been increasingly unforgiving of companies failing to maximize profits and streamline operations.

In this section, the Diligent Market Intelligence (DMI) editorial team reveals our picks for the wildest activist campaigns of the 2023 season.

So far this year, we’ve seen the godfather of shareholder activism lock horns with a biotech giant while simultaneously defending his holding company from a shorts attack, veteran activist Nelson Peltz back down from a fight, and divisive mergers and acquisitions, some of which have developed into heated lawsuits.

1st) Carl Icahn at Illumina

Carl Icahn’s campaign for three board seats at gene sequencing company Illumina started out as a protest against its acquisition of cancer detection test maker Grail, which he argued should be unwound in the face of regulatory opposition. But in typical Icahn style, the focus shifted to Illumina CEO Francis deSouza and Chair John Thompson, who Icahn accused of having a less than independent relationship, given they had worked together at another company and publicly referred to each other as “friends.”

“We wonder how Thompson and deSouza can continue with straight faces to minimize their extensive relationship,” Icahn wrote in a May letter to shareholders, criticizing the board’s decision to award deSouza an 87% pay increase to $27 million, despite Illumina’s stock declining by over 60% in 2022.

Icahn appeared to be on the ropes, however, when a May 2 short report by Hindenburg Research accused his namesake conglomerate, Icahn Enterprises, of using a “Ponzi-like” economic structure to pay dividends, resulting in a 50% fall in its market capitalization. Yet, shareholders largely overlooked the issue, voting in Icahn lieutenant Andrew Teno to the board at the May 25 annual meeting, while voting out Chair Thompson.

“[Icahn’s] a shareholder and entitled to nominate, vote, and make suggestions,” commented Lawrence Elbaum, co-head of Vinson & Elkins’ activism practice. “If he was trying to take over the company, [Illumina] could have said his people shouldn’t have oversight because they don’t even have good oversight over Icahn Enterprises. But he just wanted a few seats.”

The campaign could well have another chapter. On June 2, Hologic CEO Stephen MacMillan and Edwards Lifesciences CFO Scott Ullem joined the board, potentially weakening Icahn’s influence. Ten days later, deSouza revealed he would be stepping down as CEO.

In July, it was revealed that Illumina may be subject to an EU fine of up to $453 million, due to the Grail acquisition’s lack of regulatory approval.

2nd) IAA at Ritchie Bros.

The storied merger of Ritchie Bros. Auctioneers and IAA was one of the most openly debated deals in a long time.

Upon announcing its intention to acquire auto salvage and parts auction company IAA for $7.3 billion in November last year, Ritchie Bros.’ stock price tanked by 20%, quickly becoming the subject of criticism from investors like Luxor Capital and Janus Henderson, over fears that the deal was not the “unique and extraordinary opportunity” the company described.

Deep Field Asset Management was more forthright in its criticism of the potential deal, arguing in a February statement that it would “destroy” shareholder value and “should be sent to the scrapyard by RBA shareholders.”

The storied merger of Ritchie Bros. Auctioneers and IAA was one of the most openly debated deals in a long time. ”

The transaction also garnered so much attention from investors due to its cross-border aspect with Canada, adding nuances to the transaction and how the merger was voted on.

Ritchie Bros. opted to sweeten the offer, bringing Starboard Value into the deal with a board seat in return for a $500-million investment agreement, while Ancora Advisors issued a presentation calling out naysaying investors for making misleading, false, and “laughable” arguments against the acquisition.

The week before the special meeting, odds appeared stacked against the deal. Not only had the acquisition faced mounting investor opposition, but both Glass Lewis and Institutional Shareholder Services (ISS) recommended shareholders vote against the deal, touting the companies’ prospects as standalones.

Despite pushback, the deal ultimately went through, with more than 46% of shareholders voting against the acquisition at the March 14 special meeting.

3rd) Trian Partners at Walt Disney Co.

Trian Partners’ campaign at Walt Disney was gearing up to be what looked like one of the headline campaigns of the season before drawing to an abrupt close after Disney unveiled a bold restructuring plan that promised to result in $5.5 billion in savings.

Just one month after Disney reshuffled its board as part of a truce with Third Point Partners and revealed Bob Iger would be returning as CEO two years into his successor’s tenure, Trian Partners revealed its intention to nominate founder Nelson Peltz to the media giant’s board.

Trian claimed Disney was “a company in crisis” after shedding $120 billion in market value last year, seeing its earnings per share decline by 50% since 2018, scrapping its dividend in 2020 for the first time in 57 years, and lacking an actionable CEO succession plan. The company, Peltz argued, had no excuse not to be thriving, given its “unrivalled global scale.”

Trian claimed Disney was ‘a company in crisis’ after shedding $120 billion in market value last year and seeing its earnings per share decline by 50% since 2018.

Disney’s attempt to placate Peltz through the appointment of Mark Parker as independent chair failed to bear fruit, with the company setting its shareholder meeting for April 3.

The campaign took a sudden change in direction on February 8, when Disney published better-than-expected financial results for Q1 2023, along with a raft of business initiatives, including plans to reinstate its dividend by the end of 2023 and a reorganization under three core businesses.

The next day, Peltz ended his fight at Disney, claiming the proposed changes “are a win for all shareholders” and broadly aligned with Trian’s thinking. “We are pleased with the role that Trian was able to play in helping to focus the board to take decisive actions which we believe will lead to better financial results,” a spokesperson for Trian Partners told Diligent Market Intelligence (DMI).

4th) Coliseum Capital Management at Purple Innovation

To kick off this eight-month campaign, in September 2022 investor Coliseum Capital Management offered to acquire mattress maker Purple Innovation for $4.35 per share, reaffirming its longstanding support for the company and management team.

Purple was resistant, electing to adopt a poison pill and rejecting the $362-million takeover offer, claiming the bid “undervalued” its business and prospects.

The mattress specialist opted to issue preferred stock with cumulative voting rights, designed to prevent a Coliseum board sweep.

With Coliseum owning 44% of the shares and planning a control slate, the mattress specialist opted to issue preferred stock with cumulative voting rights, designed to prevent a Coliseum board sweep. In the succeeding months, Coliseum sued Purple over the preferred dividend and subsequently Purple announced undesirable quarterly earnings, which caused its share price to fall.

In mid-April, Purple reached a settlement with Coliseum under which three new directors were appointed to the board, incumbent director Adam Gray, managing partner at Coliseum, was named board chair. In addition, the cumulative voting securities were redeemed, restoring the company’s one-share/ one-vote construct.

5th) Politan Capital at Masimo Corp.

After Masimo battled its way through a rough year of operational underperformance, legal skirmishes, and an unpopular acquisition that sent its stock plummeting 42.5%, Politan Capital Management disclosed an 8.8% stake in August 2022, briefly sending the stock up 8.4%. But what was to come ranked among the most explosive campaigns of the 2023 season.

Just two months after disclosing its stake, Politan filed a lawsuit against Masimo, claiming that the Russell 3000 medical device company’s board had breached its fiduciary duty by approving a highly dilutive poison pill with a 10% trigger, and adding new “extreme” nomination requirements, after the activist privately stated interest in joining the board.

“Universal proxy is a voting mechanic – it did not create a new way for shareholders to seek board seats or make running a proxy contest less expensive,” Ryan Nebel, partner at Olshan Frome Wolosky, told DMI. “As a consequence, companies like Masimo that bought into these false narratives have now been put on the defensive by concerned shareholders and advocacy groups for adopting these ill-advised amendments.”

The lawsuit was kicked back and forth for several months until Masimo agreed to revert to its old bylaws in February. However, now joined by California State Teachers’ Retirement System (CalSTRS), Politan maintained legal pressure on Masimo regarding CEO Joe Kiani’s employment agreement which, among other things, would allow Kiani restricted stock units equal to 5% of the outstanding shares and the potential for a $43-million cash payment.

At the June 26 special meeting, Politan secured both of the board seats it sought, including one for the activist firm’s chief investment officer, Quentin Koffey

Honorable mentions

Other activist campaigns worth mentioning include the five-firm activist swarm around Salesforce, which averted a proxy fight with Elliott Management after delivering better-than-expected fourth quarter results and adding ValueAct Capital Partners CEO Mason Morfit to its board.

Bluebell Capital Partners’ push for BlackRock to replace CEO Larry Fink and review its ESG investment policies also dominated headlines, being one of the few ESG campaigns of the season by an activist hedge fund, while Murchinson’s campaign at Nano Dimension was fraught with lawsuits and contested acquisitions.

Bluebell Capital’s push for BlackRock to replace CEO Larry Fink also dominated headlines.

Oasis Capital’s proxy fight at Fujitec made our top 10 for the second consecutive year, after former CEO and Chair Takakazu Uchiyama failed in his bid to completely overhaul the board, just months after being fired by recently elected Oasis directors. Ping An Insurance’s push for HSBC to split its Asian and western operations was another memorable campaign that ended with the U.K. banking giant selling its Canadian business, reinstating its dividend, and shareholders rejecting the split.