What's Next for These Companies Targeted by Activists?

NEW YORK (The Deal) -- Investors who follow activist investors are well advised to look ahead on corporate calendars to see if there's an upcoming even that means change may be on the way.

Jive Software  (JIVE) , RealD  (RLD) and Brink's  (BCO) all at various stages of being targeted by activist investors-- and in each case a catalyst may be around the corner that could move the companies' stock price. Though Syngenta  (SYT) does not have an investor-turned-activist as yet, conditions are ripe at the agricultural business for change.

A recent analyst's report from Sanford C. Bernstein & Co. LLC suggests that activist investors may seek to accelerate change at Syngenta after the Switzerland-based company rejected a Sfr43.7 billion ($45.1 billion) bid from Monsanto  (MON) in August. The report notes that investors are "deeply skeptical" of the current strategy and its management's "lack of engagement" with Monsanto.

As a result they may push for an extraordinary general meeting with the purpose of replacing directors and management. Based on Swiss law and Syngenta's articles of incorporation, a group of investors with a 10% stake can call for an extraordinary general meeting to give shareholders a chance to vote on removing board members. Reports noted that influential hedge fund billionaire John Paulson is already a substantial shareholder and is supportive of a deal between the two companies.

Though Paulson likely got into the Monsanto-Syngenta trade on the basis of his traditional merger-arb approach, he has been known to push for changes at companies. Syngenta and Paulson did not return calls.

Look for Paulson's quarterly portfolio securities filing in mid-November to confirm his stake. Syngenta agreed last month to sell its vegetable seed business and return $2 billion to shareholders to seek their backing but a number of disgruntled investors still exist.

On the other side of the Atlantic, private equity firm Francisco Partners, which has invested in 150 technology companies over the past 15 years, has quietly accumulated a 6.6% stake in social network company Jive Software. This suggests to some the buyout shop wants to acquire the business or at least put it in play. The buyout shop manager said in a 13D regulatory filing -- the filing that signals activist intent -- that it has had talks with management and the board and other shareholders about San Francisco-based Jive's "strategy and future plans."

After acquiring an initial stake in late August at prices between $4.04 and $4.09 a share, Francisco Partners last month accumulated more shares at slightly higher prices. Jive did not return calls but an activist investor that occasionally seeks out private equity buyers for companies said he would be "shocked" if Francisco did not want to acquire the company that develops social media communication platforms for businesses.


A UBS analyst report in August said that Jive's depressed valuation at the time could make it a potential M&A candidate. It traded at around $4 a share then and has recovered a bit to $4.84 a share lately, likely due to the Francisco accumulation. Already one activist investor, Cannell Capital, has accumulated a roughly 1% stake over the past couple of quarters. However, any buyer -- or activist fund campaigning for board seats -- would need the support of Jive co-founder Mathew Tucker, an 8% holder, and VC-backer Sequoia Capital Growth Fund, which owns 18% of the $364.8 million market cap company.

An activist seeking to elect dissident directors at Jive would need to submit nominations between Jan. 26 and Feb. 25 for next year's annual meeting.

A similar situation of activists following a private equity firm into a potential corporate sale took place at Ann Inc.. Engine Capital got involved at Ann after private equity firm Golden Gate Capital Partners acquired a stake and, as in the case of Jive, made a 13D filing. "One of the reasons we got involved was because Golden Gate was involved," said Engine Capital founder Arnaud Ajdler in a recent interview. "We thought they would be interested in buying Ann and at the very least we would have another shareholder pushing for change." Ann was subsequently sold to Ascena Retail Group  (ASNA) for $2.15 billion.

Francisco Partners has benefited from activist activity in the past. The buyout shop acquired Procera Networks Inc. in April after the network traffic management company came under a proxy fight threat by Castle Union LLC to sell itself.

Francisco Partners and Jive Software did not return calls.

RealD, a 3-D cinema technology company that is under pressure from Jeff Smith's activist fund, Starboard Value, last week postponed for the third time its deadline for shareholders to nominate directors. The new deadline is Oct. 30. The company rejected a $633 million hostile bid from Starboard in February and launched a strategic review.

Some industry observers believe the deadline postponement is a way to finish that review while others think it's simply a way to give RealD more time to improve results. It looks like Starboard -- a 10% holder -- or another activist could be on the verge of launching a proxy contest to install a minority slate of directors if the review isn't completed soon. (It is already way past due for an annual meeting at RealD, which held its last gathering in August 2014). Meanwhile the stock has languished in recent months and traded late Tuesday at $9.68 a share, down about 16% from its 52-week high. Another activist, Gamco's Mario Gabelli, owns a 3% stake.

Finally, cash handler Brink's likely has until Jan. 9 -- a key deadline for nominating dissident director candidates -- to either sell itself, improve its route logistics operations and stock price or potentially face a proxy fight from Starboard's Smith or Gamco's Gabelli. The two activists together own 20% of the company (Smith 12%, Gabelli 8%) and Smith on Monday urged the armored car transport company to take a look at pursuing a strategic combination with another global logistics company. (Gabelli said last year he may seek board candidates.)

In the note, Smith suggested that he and Brink's CEO Thomas Schievelbein have had an "open and constructive dialogue," but watch for that to deteriorate if a sale or share price improvement doesn't happen soon.

RealD did not return calls.

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