The Morning Brief: McGuire’s Marcato Reveals Terex Stake

Richard (Mick) McGuire III’s San Francisco-based activist firm Marcato Capital Management has acquired a 5.1 percent stake, or 5.5 million shares, of crane manufacturer Terex, according to a regulatory filing. The stake was announced in a 13D filing with the Securities and Exchange Commission, meaning it is an active investment. The filing noted in typical boilerplate language that Marcato thinks the company’s shares are undervalued and that it has held and will continue to have discussions with Terex’s management team regarding ways to enhance shareholder value. These may include improving returns on invested capital, margins, capacity utilization, and so on. Terex shares closed Thursday at $23.55, up about 2 percent on the previous day’s close. Earlier this week Marcato announced it had taken a stake in Buffalo Wild Wings.


The battle between Jeffrey Smith’s New York-based activist hedge fund firm Starboard Value and pharmaceutical company Depomed is heating up. This week Starboard sent a letter to shareholders of Depomed, in which Starboard has a 9.8 percent stake, urging them to appoint Robert Savage and James Tyree to assist in Starboard’s solicitation efforts to call a special meeting to replace the company’s board and to join the company’s board if Starboard wins its fight. Savage is the former worldwide chairman for the pharmaceuticals group at Johnson & Johnson and Tyree was the former executive vice president for pharmaceutical products at Abbott Labs.

Starboard said back when its Depomed stake was revealed in April that the company’s management has taken “egregious” steps to entrench itself and avoid the company being acquired. In the letter sent this week, Starboard said it continues to have “significant concerns regarding serious corporate governance deficiencies, questionable capital allocation decisions, and actions taken by the Board to stymie strategic interest in acquiring Depomed” and that it decided against adding any additional board nominees to its proposed slate because doing so would further delay its efforts to replace the board, per Depomed’s bylaws.

Starboard blasted Depomed’s decision to set the date for a special meeting for August 19, saying it deliberately waited until as late a date as permitted under its bylaws because “when the Company realized we had assembled a highly qualified slate, they no longer wished to hold the meeting as soon as possible.” The letter added: “This is yet another example of the Board attempting to disenfranchise shareholders and further entrench itself and bares [sic] an eerie resemblance to the delay tactics that Depomed used against Horizon Pharma plc (“Horizon”) during Horizon’s failed acquisition proposal of Depomed.”

Starboard now wants to control the timing of the special meeting and did not mince words as to why, saying in the letter, “We will proceed with our SEC-compliant solicitation process to ensure that shareholders have their voices heard and to prevent Depomed from any further attempts to manipulate our Special Meeting process and disenfranchise shareholders with needless stratagems.”


Another activist firm, Keith Meister’s New York-based Corvex Management, filed a petition with the Federal Communications Commission to increase its stake in the Internet radio company to 14.99 percent without further FCC approval. Meister revealed in May that he had taken a 9.95 percent stake in the company and is urging it to consider putting itself up for sale. Last week the Wall Street Journal reported that Liberty Media Corp. floated an offer of $15 per share for Pandora, but that Pandora thinks its shares are worth closer to $20 apiece.


A slew of investment banks lifted their price targets on Facebook after the social media giant reported quarterly profits of $2 billion — just six months after it crossed the $1 billion threshold for the first time. Deutsche Bank raised its price target from $160 to $170 per share, Stifel raised its from $145 to $155, UBS raised its from $150 to $155 and Credit Suisse raised its from $145 to $154. Facebook was held by at least 191 different hedge funds as of the end of the first quarter.