Jun 12, 2019

Activist investor changes it up, tries to stop big corporate M&A

Dan Primack, author of Pro Rata

Companies used to fear that activist investors would pressure them to sell. Now they fear activist pressure to not buy.

Driving the news: Bill Ackman is urging United Technologies to scrap its mega-merger with Raytheon.

  • Ackman's Pershing Square Capital has less than a 1% stake in UTX, valued at around $745 million. Twenty-two other outside investors hold larger positions.
  • But he has one of Wall Street's loudest megaphones, and is threatening to publicly oppose the deal, per a memo obtained by The Wall Street Journal.

More from the memo:

It "makes no sense to us why you would consider a stock acquisition using today's massively undervalued UTC common stock to buy a large business of inferior quality to the company's existing businesses, and for which we cannot comprehend the strategic logic."

Carl Icahn is suing Occidental Petroleum, in which he reportedly built a position worth north of $1 billion, over its proposed purchase of Anadarko.

  • Icahn thinks the deal is overpriced, with Occidental succumbing to pricing pressure from earlier Anadarko bidder Chevron. Moreover, he thinks that financing terms given to Warren Buffett were far too generous.
  • He also argues Occidental would be better off selling itself than buying Anadarko, saying the deal's debt-laden math can only work (possibly) if oil prices rise and don't fall for years.
  • But he's not threatening to vote against the deal, as Ackman is with UTX/Raytheon, because Occidental structured its offer in a way that sidesteps the need for a shareholder vote. So add that to the list of things that bother Icahn.

The bottom line: Ackman and Icahn have history as antagonistic rivals. But they often swim in similar strategic directions.

Go deeper: United Technologies, Raytheon reach aero-space mega-merger

Go deeper

Updated 20 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11:30 p.m. ET: 6,889,889 — Total deaths: 399,642 — Total recoveries — 3,085,326Map.
  2. U.S.: Total confirmed cases as of 11:30 p.m. ET: 1,920,061 — Total deaths: 109,802 — Total recoveries: 500,849 — Total tested: 19,778,873Map.
  3. Public health: Why the pandemic is hitting minorities harder — Coronavirus curve rises in FloridaHow racism threatens the response to the pandemic Some people are drinking and inhaling cleaning products in attempt to fight the virus.
  4. Tech: The pandemic is accelerating next-generation disease diagnostics — Robotics looks to copy software-as-a-service model.
  5. Business: Budgets busted by coronavirus make it harder for cities to address inequality Sports, film production in California to resume June 12 after 3-month hiatus.
  6. Education: Students and teachers flunked remote learning.

George Floyd updates

Protesters in Washington, D.C. on June 6. Photo: Samuel Corum/Getty Images

Tens of thousands of demonstrators are rallying in cities across the U.S. and around the world to protest the killing of George Floyd. Huge crowds have assembled in Washington, D.C., Philadelphia and Chicago for full-day events.

Why it matters: Twelve days of nationwide protest in the U.S. has built pressure for states to make changes on what kind of force law enforcement can use on civilians and prompted officials to review police conduct. A memorial service was held for Floyd in Raeford, North Carolina, near where he was born. Gov. Roy Cooper ordered all flags to fly at half-staff to honor him until sunset.

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In photos: People around the world rally against racism

Despite a ban on large gatherings implemented in response to the coronavirus pandemic, protesters rally against racism in front of the American Embassy in Paris on June 6. Photo: Julien Mattia/Anadolu Agency via Getty Images

Tens of thousands of people have continued to rally in cities across the world against racism and show their support this week for U.S. demonstrators protesting the death in police custody of George Floyd.

Why it matters: The tense situation in the U.S. has brought the discussion of racism and discrimination onto the global stage at a time when most of the world is consumed by the novel coronavirus.