Senator Investment is a New York-based hedge fund that is not historically known for activism. However, last year they hired Quentin Koffey from D.E. Shaw, who was previously a portfolio manager at Elliott Management and has years of experience in shareholder activism.is a publicly traded holding company engaged in actively managing and operating a group of companies and investments.
Situations like these straddle the fence of shareholder activism because it is unclear whether the "activist" is aligned with shareholders to get the highest price or aligned with the acquirer to get the lowest price. Absent a couple of occasional sentences alluding to maximizing shareholder value through a sale process, the Senator letter seems to be more interested in selling to Cannae than selling to the highest bidder.
The company was not interested in selling so they did not engage with Senator and instituted a poison pill and other tactics to thwart a potential hostile takeover. This is not unusual nor is it necessarily poor corporate governance in the context of a potential hostile takeover. However, Senator goes a little too far by characterizing these and other tactics as a "scorched earth" policy.
This is reminiscent of Marcato's attempt at Deckers where there also was no evidence of egregious misconduct or excessive underperformance and where Marcato stated that "there has been a total collapse in shareholders' confidence in the Company's Board of Directors and management team" and "a sale of the Company in this case very likely offers the highest risk-adjusted return for stockholders.
Koffey has created significant value for shareholders at companies like Lowe's and has orchestrated some very positive transformations at companies like EQT. The major difference is that those restructurings were done in the public entity where the shareholders took the full risk and reaped the full rewards of the turnaround.
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