Elliott Appears to Revert to Old Form in Taking On AT&T
By Corrie Driebusch
Elliott Management Corp., one of the most ambitious and
aggressive activist investors, has set its sights on one of its
biggest targets yet in picking a fight with AT&T Inc.
The New York hedge fund is known for campaigns against Peru and
Argentina, pressuring the countries to make payments on defaulted
bonds, and for battles with companies such as Arconic Inc.
Activist investors take stakes in public companies and push for
changes with the aim of lifting the target's stock price. Elliott,
founded by billionaire Paul Singer, is one of the most flush of
these investors, managing roughly $38 billion, and one of the most
prolific. Last year, Elliott launched the equivalent of nearly one
new public activism campaign every two weeks, making it the busiest
such investor for the second year in a row, according to Activist
Some of its clashes have turned nasty. In the fight with
Arconic, the industrial-parts maker formerly known as Alcoa,
then-Chief Executive Klaus Kleinfeld abruptly departed after he
sent an unauthorized letter to Elliott. At Athenahealth Inc., the
software company's chief CEO stepped down and apologized for
domestic abuse, more than a decade prior, which became public
during the campaign. Elliott denied any part in bringing the
information to light.
The firm has recently tried to take a more collaborative
approach with some companies in which it has taken stakes,
according to some activist-defense advisers. The image shift fits
into a broader trend of companies becoming more welcoming of
activists and awarding them more board seats. When Elliott said it
had made an investment in technology giant SAP SE in April, it
praised the German company's plans to increase profit margins.
Jesse Cohn, who runs U.S. equity activism at Elliott, recently
joined the board of eBay Inc. as part of a settlement. Elliott is
pushing the online retailer to sell some of its business units.
In its AT&T campaign, made public Monday, Elliott appears to
revert more to prior form. Elliott made its intentions known to
AT&T management only recently, even though, according to a
person familiar with the matter, the campaign was months in the
making. Elliott's public letter criticized AT&T CEO Randall
Stephenson, called out the company for elevating WarnerMedia CEO
John Stankey as AT&T's new president and chief operating
officer without "conducting a thorough search" and questioned
"AT&T's M&A strategy has not only contributed directly
to its profound share price underperformance, but has also caused
distractions that have contributed to the company's recent
operational underperformance," Elliott said in its letter.
The AT&T move caps a relatively quiet stretch for Elliott,
which has had a slower-than-usual year so far. It has publicly
launched seven campaigns, two fewer than rival Starboard Value LP,
Activist Insight data show.
Elliott has had mixed success over the years, and some of its
recent public campaigns have floundered. Arconic rejected Elliott's
bid with a private-equity firm to buy the company in January, while
a push to get TV-ratings company Nielsen Holdings PLC sold has
dragged on for over a year. Meanwhile, Elliott's offer to buy
oil-and-gas company QEP Resources Inc. fell through. Since Elliott
announced a stake in Nielsen a little over a year ago, its stock
has fallen 1.4%, while QEP shares have fallen more than 40% since
the fund's stake was revealed in February 2018.
Others have fared better. EBay is up 26% since Elliott revealed
it took a stake in January.
Beyond its size and activity, Elliott differentiates itself by
implementing its activist campaigns through both equities and debt
and isn't afraid to venture outside the U.S. It owns stakes in
companies such as France's Pernod Ricard SA and Germany's Bayer AG.
Elliott has also in recent years put more focus on purchasing
companies outright, recently closing a deal to buy bookstore chain
Barnes & Noble Inc.
Write to Corrie Driebusch at email@example.com
(END) Dow Jones Newswires
September 09, 2019 19:24 ET (23:24 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.