Shareholder-Contested M&A

Contested elections, particularly mergers, are inherently votes of no-confidence in a Board and management team.

The winning strategy for any company is to focus on the 9 out of 10 shares not held by the activist. The least risky option for those shareholders – and the least risky recommendation for ISS or Glass Lewis, to whom the shareholders often look for advice – is to support a transaction which demonstrates informed, thoughtful, comprehensive, and effective Board oversight.

An activist is effective to the extent they can undermine that confidence, focusing attention on certain facts and spinning narratives which call the Board’s oversight into question. A company is least effective when it focuses solely on reiterating the known facts. The only fact that would be determinative, the quality of the post-merger execution, is unavailable at the time of the shareholder vote:  shareholders’ only choice is whether to take a leap of faith in the Board and management team which have proposed the transaction.

SGA can: