Sidley Austin Leads Big Law Defense Against Investor Activists

Sidley Austin LLP is once again in the top spot as the firm that helped the most public companies weather shareholder activism matters over the past record-breaking year.

Sidley advised companies on 48 engagements in 2023 with total shareholder stakes in the firm’s matters valued at $7.3 billion, according to new Bloomberg data. The figure represents the value of shares owned by activist investors involved in campaigns. The firm also secured the lead in 2022 after battling 48 activist campaigns.

In second place was Vinson & Elkins LLP, which navigated 42 engagements with $3.3 billion total shareholder stakes, according to Bloomberg data ranking firms by the number of engagements. Latham & Watkins LLP was in third place with 31 engagements totaling $6.9 billion in shareholder stakes.

There were 823 new activist campaigns launched in 2023, a 24% jump from 665 campaigns in 2022.

Sidley advised biopharmaceutical company Alkermes in a proxy contest against Sarissa Capital that made headlines last year when the Sarissa head nominated his romantic partner to fill his space at Biogen Inc. after he left his seat to pursue three director seats at Alkermes. Alkermes beat back Sarisssa Capital’s efforts to secure director seats at the company’s annual meeting in late June.

Sidley took on another matter at department store chain Nordstrom Inc. where activist investor Ryan Cohen, the chairman of GameStop Corp. and founder of online pet supplies retailer Chewy Inc., nominated two board candidates before ultimately withdrawing.

Kai Liekefett, a Sidley partner who co-chairs the firm’s shareholder activism and corporate defense practice, said that overall activist activity “was enormous” in recent months. “It was one of the biggest years for activism in recent history,” he said.

Market uncertainty and volatility—spanning everything from inflation to supply chain issues—hampered what would have been even more activist matters, Liekefett said. But as some of the uncertainty dies down, he anticipates another surge this year. “I fully expect an extraordinarily busy proxy season,” he said.

V&E Fights

Vinson & Elkins held the No. 2 spot for the second consecutive year after last claiming first place in 2021. Its 42 engagements in 2023 were four more than the 38 in both 2022 and 2021. V&E’s clients included business review website Yelp Inc., drinking water provider Primo Water Corp. and bank First Foundation Inc.

The firm advised Yelp on activist investor TCS Capital Management LLC, which in May pushed the company to consider a sale over disappointment with its stock price and other concerns. TCS Capital hasn’t made any additional public requests, and Yelp hasn’t announced any plans to sell.

V&E helped Primo with activist investor Legion Partners Holdings LLC, which sought to nominate directors to the company’s board after concerns about its performance. Primo ultimately appointed two independent directors nominated by Legion to the board in May.

The firm’s work for First Foundation with Driver Management Co. was related to the activist investor’s efforts to get its own candidate on the bank’s board over concerns about shareholder value. Driver’s candidate lost at First Foundation’s annual meeting in June.

Lawrence Elbaum, a co-head of V&E’s shareholder activism practice, said he saw an uptick in activists looking for board seats in 2023 with limited capital in the markets to buy companies. But capital markets are starting to loosen up heading into 2024, he said.

“We’ll see more calls for companies to sell and more activism campaigns focused on that, as opposed to balance sheet activism, dividends, share purchases and business changes,” Elbaum said.

Latham’s Business

Latham’s 31 engagements put it at No. 3 in 2023 after sitting in the fourth spot in 2022. The firm passed Wachtell, Lipton, Rosen & Katz, which held the No. 3 ranking in 2022. Wachtell dropped to the fifth position with 18 engagements last year behind No. 4 Skadden Arps Slate Meagher & Flom LLP, which had 20 such matters.

But Latham’s $6.9 billion in shareholder stakes was second only to Sidley’s $7.3 billion. The companies the firm advised last year included car auction company IAA Inc. and 7-Eleven owner Seven & i Holdings Co.

Latham helped IAA with activist shareholders Ancora Advisors LLC and Discerene Group LP as the company pursued its March merger with Ritchie Bros. Auctioneers Inc. Latham assisted with a cooperation agreement with Ancora and advised IAA on Discerene, which opposed the tie-up over concerns Ritchie was undervaluing IAA.

Latham’s work for 7-Eleven’s parent company concerned activist investor ValueAct Capital Management LP’s campaign to overhaul management. ValueAct tried to oust Seven & i CEO Ryuichi Isaka and place its own directors on the company’s board. But the activist failed at Seven & i’s annual meeting in May.

Joshua Dubofsky, a global co-chair of Latham’s shareholder activism and takeover defense practice, said he expects more campaigns in 2024. But a possible recession and the US presidential election could dampen the market later in the year, he said.

“We’ll have to see how the broader economy goes,” Dubofsky said.

Defending Activists

Olshan Frome Wolosky LLP continued to lead as the top firm representing activists in 2023, with 139 engagements covering shareholder stakes valued at $15.6 billion, according to Bloomberg data. Last year the firm had 147 engagements with stakes valued at $19.4 billion.

Olshan advised Elliott Investment Management this year on its campaign at Salesforce Inc., ending in a March agreement where Elliott decided not to further pursue its director nominations. A joint press release said Elliott dropped its efforts in light of the company’s financial results and other factors.

Olshan also worked on a campaign by Anson Funds and Cable Car Capital at MEI Pharma, a pharmaceutical company that develops cancer therapies. The activists entered a cooperation agreement with MEI Pharma in October in which the company agreed to appoint two directors selected by Anson and Cable Car as well as another director who was mutually agreed upon.

Meagan Reda, a partner at Olshan focusing on shareholder activism and proxy contests, said new universal proxy card rules made proxy contest costs “substantially increase” last year despite the misconception by many that the rules would actually make them cheaper. The new universal proxy rules, which became effective in September 2022, changed the way corporate elections are run by requiring all nominated director candidates to appear on a single ballot.

Reda said some companies last year used the guise of needing to amend their bylaws to reflect the new rules so they could “adopt extremely egregious, unreasonable and onerous bylaw amendments, making it substantially more difficult, time-consuming, and costly to run a proxy contest.”

The bylaw amendments “will continue to impact the 2024 proxy season and beyond,” Reda said.