Sidley No. 1 Again for Advising Companies on Investor Activism

Sidley Austin again led a ranking of big law firms helping public companies defend against shareholder activism campaigns in the first half of 2024, according to new Bloomberg data.

Sidley advised companies on 32 activist engagements with shareholder stakes totaling $9.5 billion, a figure that represents the value of shares that investors held in the public companies facing campaigns. The law firm previously secured the lead among legal advisers in 2023 after defending companies against 48 activist campaigns, according to Bloomberg’s ranking of law firms by number of shareholder engagements.

“Our pipeline is very robust and we expect continued flow of campaigns throughout the rest of the year,” said Derek Zaba, Sidley’s shareholder activism and corporate defense practice co-chair.

Vinson & Elkins took the No. 2 spot in Bloomberg’s ranking with an advisory role to companies on 19 activist engagements, representing $1.7 billion in total shareholder stakes. Wachtell Lipton Rosen & Katz jumped into third place for legal advisers on corporate defense, with 18 engagements totaling $5 billion in shareholder stakes.

Shareholders such as Starboard Value, Elliott Investment Management and Hestia Capital Management launched 428 new activist campaigns globally in the first half of 2024, compared with 430 campaigns in the same period last year, according to the Bloomberg data. The overall value of activist stakes fell 25% over that time frame. In the US, the number of activist shareholder campaigns decreased 10% year over year to 177 so far in 2024, from 197.

In one of its engagements, Sidley advised human resources technology provider Alight Inc. on activism defense after shareholder Starboard Value launched a campaign seeking new board candidates. In May, Alight agreed to increase the number of board seats to 11 from nine. Starboard then withdrew its nominees.

Activist ‘Agitation’

Vinson & Elkins ranked second in the legal adviser league tables for defense against shareholder campaigns the first half of 2024, unchanged from its 2023 rank.

In 2024, the law firm saw a lot of “agitation” from activist investors seeking high-profile changes at companies, said Patrick Gadson, a Vinson & Elkins partner who co-leads the firm’s shareholder activism practice. Gadson pointed to billionaire and activist shareholder Nelson Peltz’s attempt to gain two seats at Walt Disney Co. as an example of “splashy” campaigns that are likely to continue in years to come.

Though Vinson & Elkins didn’t work on the Disney campaign, the firm helped shipping and logistics company Pitney Bowes Inc. navigate a request by shareholder Hestia Capital Management LLC to add two board members to Pitney’s board of directors.

Vinson & Elkins also helped LifeVantage Corp., a health and wellness company, defend against investor Bradley Radoff and Sudbury Capital Fund LP, which sought to install three members to the board. All three lost their bids to join the board, and a sitting member gained just enough votes for another term.

Wachtell’s Climb

Wachtell Lipton Rosen & Katz rose to third place in the activist advisory league tables, up from No. 5 in 2023. The law firm overtook Latham & Watkins, which held the No. 3 spot in 2023.

Wachtell helped Bloomin’ Brands Inc., the parent company of restaurant chains such as Outback Steakhouse, navigate another Starboard Value campaign to install two board members. The company settled with Starboard in January, adding to its board Dave George, the former chief operating officer of Bloomin’, as well as a Starboard partner.

In addition to the two board seats, Bloomin’ agreed to form an operating committee on the board to help drive improvements. Starboard’s stated goal last year, when it built a 9.7% stake in the company, was to retool Outback from a “bar and grill” model to a traditional steakhouse.

Wachtell also helped aerospace and engineering company Barnes Group settle with Irenic Capital Management to name Adam Katz, co-founder of Irenic, to the board of Barnes in March. At the same time, the company announced two board members would step down, including the chair.

Attorneys at Wachtell did not respond to requests for comment.

Advising Activists

Olshan Frome Wolosky led, once again, as the top law firm representing investor activists in the first half of 2024, with 85 engagements involving shareholder stakes valued at $16.7 billion, according to Bloomberg data. The firm advised on 139 engagements with stakes valued at $15.6 billion for all of 2023. Olshan helped Starboard install board directors at Alight and Bloomin’ Brands.

Overall, activists launched 219 campaigns globally last quarter, but the pace of new campaigns may not be enough to top last year’s record of 831, according to a Bloomberg Law analysis.

Ken Mantel, a partner at Olshan who helps investors engage with companies, said the pace of engagements isn’t likely to slow down. Securities and Exchange Commission rules like the universal proxy card, which requires all nominated director candidates to appear on a single ballot, continue to make activism a “vibrant trend,” he said.

And investors aren’t going to “shy away” from engaging large-cap companies for the foreseeable future, Mantel said.

“You’re going to continue to see the activist investors flex their muscles and make very significant investments based on their conviction that they can effect change,” he said.