When an activist group challenged a company’s efforts to pursue an acquisition, the client sought SMA’s expertise to develop a shareholder outreach plan. The plan resulted in the merger receiving shareholder approval and the dissidents being defeated.
Overcome an activist group fighting to prevent a planned merger of equals
The company’s management decided that their organization needed critical mass and economies of scale that could only be gained through an acquisition. They settled on an equal-sized company that was in financial distress, with complementary products. A dissident shareholder was skeptical of the transaction and enlisted an activist group to mount a campaign to derail the deal.
Without the transaction, management feared the company would suffer a slow competitive death. The activists countered that it was too risky to bet on a distressed company. Shareholder approval of the deal would ultimately decide the fate of the company along with that of its management team.
SMA executed a comprehensive communications plan aimed at educating the company’s shareholders about the merits of the transaction. Through an array of investor materials, including presentations, fact sheets, FAQs, proxy fight letters, news releases and conference calls, SMA assisted management in detailing the benefits of the combined entities, along with emphasizing the perils of the client company as a standalone. SMA worked directly to not only win investor support but to ensure that enough shares were voted to achieve a quorum.
The acquisition gained shareholder approval and proved to be successful
The educational approach taken in promoting the merger overcame the fierce opposition of the dissident/activist group. The aggressive proxy solicitation efforts also generated a high voter turnout and consequently more visibility for management and its strategy. As management delivered on its planned strategy for the combined company, Wall Street responded favorably, with the stock price stock rising more than 25% within a year after the closing.
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