Shareholder Activism Is in ‘Phase Three,’ Debevoise’s Rosen Says

  • Companies now engage activists in open dialogue, lawyer says
  • Rosen advised Dell’s board during Icahn, buyout conversations

Rosen: Well-Advised Companies Listen to Activists

Shareholder activism has entered a stage in which companies engage such investors and in some cases even welcome them among owners, Debevoise & Plimpton LLP’s Jeffrey Rosen said.

“The engagement is more dynamic,” Rosen, a partner and the head of the law firm’s corporate department, said Monday on Bloomberg Television. “Corporations are looking for more positive ways of responding. It’s more of an open dialogue.”

Early activists would typically enter a company with a regulatory filing disclosing their stake and a strongly worded letter, in what Rosen called the first phase of shareholder activism. In the second stage, companies and such investors exchanged dialogue more openly and other long-term stockholders sometimes joined in to voice support for proposed strategies to improve the businesses.

“The structure of the engagement was overtly somewhat hostile and corporations responded very strongly,” Rosen said of early activist interactions. “It was confrontational.”

Rosen specializes in advising clients on mergers and acquisitions, as well as joint ventures, restructuring and securities offerings. He also works with boards facing activist challenges.

He has worked extensively for Verizon Communications Inc., including on its 2009 acquisition of Alltel Corp. for $28.1 billion and the sale of its local wireline operations in California, Florida and Texas to Frontier Communications Corp. for $10.5 billion. Rosen also advised the special committee to the board of directors at Dell Inc. when the company was acquired by founder Michael Dell and Silver Lake Management in a $24.9 billion buyout.

Eight months before the Dell deal was announced in February 2013, shareholder Southeastern Asset Management proposed that Dell undertake a buyout. Later, as Southeastern’s proposals changed, billionaire shareholder Carl Icahn teamed up with the firm to strengthen their demands.

Companies have announced almost $2 trillion in M&A this year, according to data compiled by Bloomberg, a fall of about 16 percent from the same period in 2015. The biggest deal of 2016 so far is Bayer AG’s pending takeover of Monsanto Co., valued at about $66 billion.

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