Shareholders are more engaged than ever. They are actively assessing company financial and investment performance, governance and reputation issues and paying closer attention to the inner workings of the companies in which they invest. Led by professional activist firms, dissatisfied shareholders will pressure companies to make significant strategic and governance changes, including replacing an unwilling CEO or the board of directors.
Osler has been at the forefront of shareholder activism in Canada, representing prominent activist shareholders as well as leading Canadian companies that have been required to defend against activist initiatives. We have a deep understanding of the regulatory framework in which contests for control are fought and the strategic levers available to both sides in the event of a dispute. Our leading experts in Shareholder Activism, as well as M&A, Tax, Corporate Governance and Litigation, provide advice on issues that are vital to initiating an activist initiative or defending against one.
Preparing for and responding to activist shareholder initiatives
Strategic shareholder activists do their homework. They analyze the company’s performance, strategy, capitalization, management and governance, assess alternatives and develop a plan they believe will increase returns to shareholders. They test their plan with larger investors and modify their approach accordingly. By the time the activist approaches management, they have developed analysis, a sense of their support and a strategy for building further support through media relations and, if necessary, a proxy contest.
Sophisticated companies take a proactive approach and seek to “think like an activist”. A key starting point for management and boards is to seek advice from external legal and financial advisors on areas of potential vulnerability and strive for an objective assessment of the corporation’s strategy, plans and available alternatives. Osler has worked with a broad range of public Canadian companies that have defeated initiatives brought forward by activist shareholders. We work closely with management, boards of directors and independent committees in preparing for an activist approach and we provide strategic advice on how to avoid becoming an activist target.
When an activist threat emerges, we help companies respond in an effective and disciplined manner, consistent with directors’ fiduciary responsibilities. We provide strategic advice on addressing activist threats without incurring the expense and distraction of a public proxy battle. And when a fight is unavoidable, we help companies and their directors defend and enhance their reputations throughout an activist campaign and advise board chairs on their duties and responsibilities in overseeing contested shareholder meetings.
Initiating an activist campaign
Osler has advised prominent shareholder activists on some of the most significant and high profile activist initiatives involving Canadian public companies. We understand the goals of activist shareholders and the tools available to them to achieve their goals, as well as how the structural legal defences employed by Canadian companies can impact the ability of activists to achieve success. We provide activist shareholders with strategic advice on how to prepare, initiate and announce an activist approach to a target, achieve the activist’s objectives, either through execution, litigation or negotiation, as well as advice on the required regulatory approvals, filings and other compliance matters that must be undertaken following a successful initiative.