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

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