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The Morning Brief: Starboard to Launch Proxy Fight with Yahoo Over Board
Jeffrey Smith’s Starboard Value announced it plans to launch a proxy fight with Yahoo in a bid to take over the company’s board of directors. The New York activist hedge fund firm has nominated a slate of nine directors for election at Yahoo’s 2016 annual meeting.
“Yahoo’s current Board has failed to deliver acceptable results for shareholders time and time again,” Starboard states in its announcement. “Significant board change is desperately needed to hold management accountable and to properly oversee the future of Yahoo - whether the outcome be an operational turnaround plan, separation, or sale of assets.”
Among the nine director nominees are Smith, who founded Starboard and is the hedge fund firm’s CEO and chief investment officer. Smith previously served on the boards of Office Depot, Quantum Corporation, Regis Corporation, Surmodics, Zoran Corporation, Phoenix Technologies (where he served as chairman), Actel Corporation, S1 Corporation, Kensey Nash Corporation, and The Fresh Juice Company. Other director nominees include Richard Hill, who has served as chairman of Tessera Technologies, an earlier, successful Starboard target.
Well, that was quick. One month after Jana Partners said it owned 8 percent of the shares of Team Health Holdings and submitted three nominees to the board of directors of the Knoxville, Tennessee, hospital staffing company, the two parties announced a compromise agreement. Under the deal, Scott Ostfeld, a Jana partner and co-portfolio manager of Jana Strategic Investments, and Edwin Crawford, former chairman of CVS Caremark Corporation, were appointed to TeamHealth’s board, effective immediately. This brings the total number of directors to 12, 10 of whom are independent.
TeamHealth and the New York activist firm also agreed that Nancy Schlichting, chief executive officer of Henry Ford Health System, will be appointed to the board in January 2017. The company also agreed to reduce the size of the board by one director each year over the next three years, beginning at this year’s annual meeting. “We appreciate TeamHealth’s constructive approach in reaching this agreement,” said Jana founder Barry Rosenstein in a press release.
North Tide Capital disclosed it owns 6.5 million shares, or 5.8 percent, of Community Health Systems. The Boston-based hedge fund firm founded in 2010 by Conan Laughlin specializes health care companies. Last year its fund was down 16 percent. The firm, which on earlier occasions has been known to take activist stakes in companies, filed its disclosure of the Community Health investment in a 13G, meaning it is a passive investment. Prior to founding North Tide, Laughlin was a portfolio manager at Israel (Izzy) Englander’s New York-based Millennium Management from 2005 through 2011.
Credit Suisse has raised its price target on hedge fund favorite Air Products and Chemicals from $145 to $1.61, after a new analyst assumed coverage of the stock with an Outperform Rating. The bank also raised its earnings estimates for the industrial gases provider for the next two years.
“We retain our positive view on APD as the full run-rate of ongoing cost cuts appears underappreciated, with a significant degree of the benefit to be realized during the first half of 2016,” Credit Suisse states in a report to clients.
The stock dropped about 1.5 percent on Thursday but is up about 9 percent year-to-date. This makes the stock a top performer for William Ackman’s Pershing Square Capital Management, the company’s largest shareholder at the end of the fourth quarter. Other top holders at year-end include O. Andreas Halvorsen’s Greenwich, Connecticut-based Viking Global Investors.
Shares of Office Depot jumped 9 percent, while Staples surged 7 percent, as investors became confident once again that the government will approve their planned merger. At year-end, New York-based Elliott Management Corp. and Los Angeles-based Canyon Capital Advisors were top-10 holders of Office Depot.
Shares of SunEdison fell another 4.7 percent, to close at its all-time low of $1.21, amid continuing bankruptcy fears surrounding the renewable energy company.
East come, easy go. Shares of Valeant Pharmaceuticals International snapped their three-day winning streak, giving back 7 percent on Thursday.