Freedman Quoted on Recent Trend of Takeover Bids by Activist Funds
Law360 (subscription required) published an article chronicling how activist funds with burgeoning cash reserves are now open to pursue new strategies, in particular the taking over of companies they have targeted. Olshan Partner Andrew Freedman clarifies the approach: “When [activists] make an offer for a company, it's because they have a true desire to buy the company and implement value-enhancing activities themselves. But at the end of the day, when you come out with an unsolicited offer, it's not just a public action attached to a 13D — it's making the company respond and react. Even if the company commences its own sale process, an activist would be happy to be involved.” Activists are still testing out this method, modeled after private equity, but it's unlikely that they'll go after multibillion-dollar companies. Instead, they’ll stick to smaller targets, because “Stakes in these big companies are typically worth $100 million to $400 million when you think about it, so it's just another way of raising the stakes,” Freedman said. “It's like betting big on a $5 blackjack table.” Still, the most aggressive takeovers aren’t being waged by activists, but by other companies.