Law360 Quotes Andrew Freedman on Activists’ M&A Opposition in Q1 of 2019

Co-Head of Olshan’s Shareholder Activism Practice Andrew Freedman was quoted recently in a Law360 article (subscription required) on activist investors’ tendency to oppose announced M&A transactions publicly either to achieve more auspicious deal terms or to abandon a deal entirely, a sharply rising trend during the first quarter of 2019. According to data compiled by Activist Insight, eleven companies faced activist opposition to their announced M&A transaction in Q1 of 2019, compared to 6 companies in Q1 of 2018 and 3 in Q1 of 2017. Bumpitrage largely accounts for this trend, a strategy whereby funds will challenge a deal’s terms in hopes of getting a buyer to pay more for a target company’s shares. Mr. Freedman explains the widespread practice, commenting, “Companies will look at what level of opposition there might be and rather than facing the prospect of a challenged deal at the special meeting vote, they will just bump up the price to appease the target’s holders.” This tactic, he asserts, will only grow more prevalent going forward: “As long as there is M&A activity, there is going to be bumpitrage. It’s just a fact of life. That’s not subsiding in any way, shape or form.” More rare, he says, are transactions that activists oppose regardless of the deal’s terms: “The fewer and further between type of scenario is when a shareholder actively solicits votes to oppose or block a deal ... where a deal is so fundamentally flawed that there’s not really any room to improve the deal terms to get support. That just doesn’t happen that frequently.”