13D weekly report - Sep 09, 2024 to Sep 13, 2024

Starboard Proposes Elimination of Dual-Class Share Structure at News Corp (NWS)

Key Summary: On September 9, 2024, Starboard Value proposed eliminating News Corp’s dual-class share structure, criticizing the governance issues related to the Murdoch family's super-voting rights. They planned to file a proxy statement and seek shareholder support for this change.

Market Cap: $15 billion| News Corporation, a media and information services company, creates and distributes authoritative and engaging content, and other products and services for consumers and businesses worldwide.

On September 9, 2024, Starboard Value announced it had sent a letter to News Corp shareholders proposing the elimination of the company’s dual-class share structure. Starboard criticized News Corp’s governance, highlighting issues with the Murdoch family's super-voting rights and internal family conflicts. The letter argued that extending these rights was unreasonable and exacerbated the company's valuation discount. Starboard planned to file a proxy statement with more details and sought shareholder support to address these governance concerns.

Past

In October 2023, Starboard Value issued a presentation suggesting that News Corp should consider spinning off its online property businesses, estimating it could generate a $7 billion windfall for the company. Starboard believes that News Corp's current valuation of $12.6 billion "does not make sense" and suggests breaking up the business to increase shareholder value. The hedge fund sees potential in separating the digital real estate assets, such as Move Inc and REA Group, through a tax-free spin-off, which could lead to a significant increase in the company's share price.

Mehran Nia Announces Plan to Nominate New Directors for CarParts.com (PRTS) Board

Key Summary: On September 9, 2024, Mehran Nia announced his intent to nominate new directors for CarParts.com’s 2025 board election, following his 2021 resignation.

Market Cap: $50 million | CarParts.Com, Inc., together with its subsidiaries, operates as an online provider of aftermarket auto parts and accessories in the United States and the Philippines. 

On September 9, 2024, Mehran Nia, co-founder of CarParts.com, Inc., released a statement of his intent to nominate a slate of director candidates for election to the Board at the 2025 annual meeting. This followed his resignation from the board in 2021 due to disagreements over the company's direction. Despite ongoing concerns voiced to management and the board, which had gone unaddressed, Mr. Nia highlighted issues including declining revenue, increased losses, depleted cash reserves, and significant talent departures. He had requested a meeting with the Board to discuss these issues but received no response. Concerned about the company's future, Mr. Nia planned to replace three incumbent directors with himself and two other candidates, emphasizing the need for proactive change to stabilize the business. Source

BOARD SEAT/ AGM/ AGREEMENT

GP Parties signed a Cooperation Agreement with IZEA Worldwide, Inc (IZEA)

Key Summary: On September 6, 2024, GP Parties signed a Cooperation Agreement with the company.

Market Cap: $40 million| IZEA Worldwide, Inc., together with its subsidiaries, offers software and professional services to connect brands and content creators in North America, the Asia Pacific, and internationally.

On September 6, 2024, GP Cash Management, GP Investments, Rodrigo Boscolo, and Mr. Bonchristiano (the "GP Parties") (18.2%) signed a Cooperation Agreement with the company and pursuant to it, the company appointed Bonchristiano and Boscolo to the Board and separated the CEO and Chairman roles.

Elliott Statement on Southwest Airlines’ (LUV) Board Resignations

ONGOING

Key Summary: On July 8, 2024, Elliott Investment Management L.P. urged Southwest Airlines' Board to overhaul leadership due to underperformance and shareholder dissatisfaction, criticizing actions like reduced revenue guidance and adopting a "poison pill." Elliott called for immediate Board reconstitution with independent executives and a new CEO. On Aug 13, 2024, Elliott stated its plan to nominate ten independent candidates to the board.

Market Cap: $17 billion| Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets.

•   On July 8, 2024, Elliott Investment Management L.P. urged the Board to implement a leadership overhaul due to sustained underperformance and shareholder dissatisfaction. Following extensive feedback from shareholders and industry stakeholders, Elliott criticized recent actions by the Board, such as reducing revenue guidance and adopting a "poison pill" to thwart Elliott's stake increase. Elliott advocated for immediate Board reconstitution with independent, experienced airline executives and a new CEO sourced externally.Press release
•   On August 5, 2024, Elliott Investment Management L.P. stated its belief that the company needed fundamental changes to improve its strategy and performance. They proposed reconstituting the Board, enhancing the leadership team by finding a new CEO and independent Board Chair, and conducting a comprehensive business review to develop and implement a new strategy to achieve industry-leading performance. Source
• On August 13, 2024, Elliott Investment Management L.P. (11%) stated that it intends to nominate ten candidates to the Board. This move follows Elliott’s call for board reconstitution, new leadership installation, and a comprehensive business review to restore Southwest’s industry-leading position. Highlighting ongoing poor performance and board resistance, Elliott emphasizes the need for change. Source
• On August 26, 2024, Elliott Investment Management sent a letter to the shareholders, expressing concerns over the company's declining performance due to poor leadership by CEO Bob Jordan and Executive Chairman Gary Kelly. Elliott criticized the management's entrenchment tactics and emphasized the need for a transparent and credible process to reinvigorate the company.
• On September 10, 2024, Elliott Investment Management praised the Board for resigning seven directors, noting it as unprecedented. They emphasized the need for further changes and expressed confidence in their nominees to guide the airline forward. Source

Politan Issues Statement From Legal Advisors Schulte Roth & Zabel and Munger, Tolles & Olson Regarding Masimo (MASI) Proxy Contest

Key Summary: In September 2022, Politan Capital Management raised governance and board representation issues with Masimo's CEO, leading to a legal complaint in October 2022. By May 2023, Politan's board nominees were elected, despite the company's commitment to only one. In March 2024, Politan nominated new candidates, criticized governance, and demanded transparency on business dealings. They raised concerns about voting manipulation and criticized Masimo’s meeting delay in July 2024. Politan's attempts to expedite the annual meeting and prevent proxy vote manipulation led to further legal actions, with both parties denying allegations as of August 2024.

Market Cap: $6 billion| Masimo Corporation develops, manufactures, and markets noninvasive monitoring technologies and hospital automation solutions worldwide..

• In September 2022, Politan Capital Management (8.8%) initiated discussions regarding corporate governance and strategic initiatives with the CEO and Chairman, Joe Kiani, expressing interest in board representation. However, after the board approved a rights agreement and amended corporate bylaws, Politan raised legal concerns and requested a meeting with the full board, which was not scheduled. This led to a legal complaint filed by Politan in October 2022, seeking relief against the company and board members.
• In May 2023, Politan submitted formal notices of intent to present a stockholder proposal and nominated two director candidates for election to the board at the 2023 AGM. This was supported by recommendations from proxy advisory firms ISS and Glass Lewis. Despite the company's commitment to appoint one of Politan's nominees, Michelle Brennan, contingent upon stockholder approval of board expansion and reelection of incumbent directors, both of Politan's nominees, including Quentin Koffey, were elected to the board at the June 2023 annual meeting.
• On March 25, 2024, Politan Capital Management (8.9%) announced its nomination of two candidates for the Board at the 2024 AGM. Quentin Koffey, a then-current director, expressed dissatisfaction with the lack of transparency and governance under CEO Joe Kiani. Politan supported a strategic review but criticized the Board's oversight. They proposed Dr. Darlene Solomon and William "Bill" Jellison as independent directors to address governance issues and enhance expertise. Politan urged engagement with shareholders to resolve concerns. Source
• On May 8, 2024, Politan Capital Management submitted a demand letter to the company seeking access to records regarding the company's consumer business separation and undisclosed joint venture partner.
• On May 9, 2024, Quentin of Politan Capital Management responded to Craig Reynolds of Masimo Corporation regarding proposals to avoid a proxy contest. Politan questioned the effectiveness of Masimo's approach and suggested adding Darlene Solomon and Bill Jellison to the board to address governance issues, emphasizing the need for a majority of independent directors. Source
• On June 14, 2024, Politan Capital Management filed proxy materials seeking support for its nominees.
• On June 26, 2024, Politan Capital Management updated its website, www.AdvanceMasimo.com in connection with the solicitation of stockholders of Masimo Corporation. Also, it posted a presentation, "Masimo Urgently Needs A Truely Independent Board" and released an open letter to the shareholders reiterating its concers and urges shareholders to vote for its nominees.
• On July 3, 2024, Politan Capital Management alerted the Masimo Board about a potential scheme to manipulate the Annual Meeting of Stockholders. They claimed a brokerage linked to an investor friendly with Mr. Kiani voted 9.9% of the company's stock, exceeding reported ownership and involving suspicious share movements. They urged the Board to set a new record date, investigate Mr. Kiani's involvement, and ensure SEC compliance. Source
• On July 12, 2024, Politan Capital Management sent a letter to the Board expressing concerns about alleged manipulation of the upcoming annual meeting through an empty voting scheme orchestrated by RTW Investments, a major shareholder linked to the company' CEO and Chairman, Joe Kiani. Despite RTW's claimed 9.9% voting stake, recent disclosures suggest they may have significantly reduced their economic exposure, raising questions about their influence on voting outcomes. Politan Capital criticized the Board for not addressing these concerns adequately, calling for independent investigation and shareholder protections to ensure a fair election process at Masimo.
• On July 12, 2024, Politan Capital announced that Glass Lewis has recommended that shareholders vote FOR the election of Politan’s nominees, Darlene Solomon and Bill Jellison, to the Company’s Board of Directors. Source
• On July 15, 2024, Politan Capital announced that ISS has recommended that shareholders vote FOR the election of Politan’s nominees, Darlene Solomon and Bill Jellison, to the Company’s Board of Directors. Source
• On July 15, 2024, the company  filed a complaint against the Politan Defendants and others, alleging violations including a declaration that Mr. Jellison and Dr. Solomon's nomination notice did not comply with the company’s bylaws, seeking an injunction against Politan from voting proxies due to misleading statements, and invalidating such proxies. Source
• On July 16, 2024, Politan Capital (8.9%) criticized the Board's decision to move the Annual Meeting from July 25, 2024, to September 19, 2024, and its lawsuit against Politan and founder Quentin Koffey, a Masimo Board member. Koffey condemned Masimo’s governance and CEO Joe Kiani's actions, claiming the meeting delay is a tactic to avoid shareholder votes and violates bylaws and Delaware law. Politan vowed to ensure the meeting occurs by September 19 and urged shareholders to vote for its nominees. Source
• On July 17, 2024, Politan filed a lawsuit in the Delaware Court of Chancery against Masimo Corporation and three of its directors, seeking to expedite the 2024 Annual Meeting and prevent further delays. Source
• On August 23, 2024, the company filed a Supplemented Memorandum seeking a preliminary injunction to prevent Politan from voting proxies until corrective disclosures are made. Source
• On August 30, 2024, Politan Capital deny all allegations in each of the Amended Complaint and the Preliminary Injunction Motion. Source
• On September 5, 2024, Politan Capital emphasized the urgent need for boardroom change ahead of the company's 2024 Annual Meeting. In a letter to shareholders, Politan reaffirmed the importance of electing its nominees, Darlene Solomon and William Jellison, to ensure independent oversight. Politan criticized Masimo's governance and legal tactics, asserting confidence in overcoming challenges to its nominations.
• On September 12, 2024, Politan Capital Management commented on a California federal court's decision denying Masimo Corporation's request for a preliminary injunction to block Politan from voting its proxies at the upcoming Annual Meeting scheduled for September 19. The court ruled in favor of Politan, allowing the shareholder vote to proceed. Politan expressed satisfaction with the ruling, emphasizing the need for independent directors on Masimo's Board and criticizing Masimo's tactics during the litigation process. Source
• On September 13, 2024, Politan Capital Management LP and its affiliates issued a statement from legal advisors Schulte Roth & Zabel and Munger, Tolles & Olson regarding the Masimo proxy contest. The advisors disagreed with the court's ruling that Politan violated a sealing order, clarifying they believed Politan could announce the motion's outcome. They appreciated the court's denial of Masimo's attempts to block Politan from voting and to delay the 2024 Annual Meeting of Stockholders. Source

Gates Capital Management Update on Vista Outdoor's (VSTO) Strategic Review and MNC Offer

Key Summary: On November 22, 2023, Colt CZ proposed a strategic combination with Vista Outdoor valuing the company at $30.00 per share and including a $900 million share repurchase post-transaction. On July 17, 2024, Gates Capital Management, owning 9.6% of Vista, opposed the sale of its Sporting Products business to Czechoslovak Group for $2.1 billion, arguing it undervalued the asset and supported alternatives, including negotiating with MNC Capital's $42 per share bid or a tax-free spin-off plan. On September 10, 2024, Gates Capital Management announced ongoing discussions with the company and MNC Capital Partners regarding the revised all-cash MNC Offer and other potential proposals, including rollover transactions related to any merger or business combination.

Market Cap: $2.2 billion | Vista Outdoor Inc. designs, manufactures, and markets outdoor recreation and shooting sports products. in the United States and internationally. 

• On November 22, 2023, Colt CZ (5.7%) sent a letter to the Board proposing a strategic combination between Colt CZ and the company that would value the company at $30.00 per share and include a $900 million share repurchase to be executed following closing of the proposed transaction.
• On July 17, 2024, Gates Capital Management, owning 9.6% of Vista Outdoor, sent a letter to Vista's Board opposing the sale of its Sporting Products business, The Kinetic Group, to Czechoslovak Group for $2.1 billion. Gates argued the sale price undervalued the asset, which generated over $400 million in annual free cash flow, and criticized the early retirement of $500 million in low-interest debt, transferring value from shareholders to bondholders. Gates also supported Institutional Shareholder Services' recommendation to vote against the sale and proposed alternatives, including negotiating with MNC Capital's $42 per share bid for Vista or reverting to a tax-free spin-off plan for The Kinetic Group and Revelyst.
• On July 26, 2024, Gates Capital Management, Inc. announced its support for MNC Capital Partners, L.P.'s $42 per share all-cash offer for Vista Outdoor, Inc. Gates Capital deemed MNC's proposal superior to Czechoslovak Group's offer for The Kinetic Group, citing concerns over Vista's recent financial performance and strategic direction. The firm also criticized Vista's management for maintaining an outdated shareholder record date and suggested that shareholders voice their support for the MNC offer directly to Vista's Board of Directors. Source
• On September 10, 2024, Gates Capital Management announced that following the company's review of strategic alternatives and engagement with MNC Capital Partners regarding its revised all-cash offer (MNC Offer), Gates Capital have been and may continue to be involved in discussions with the company and other parties, including MNC. These discussions focus on evaluating the MNC Offer and other potential proposals, including rollover transactions related to any merger or business combination involving the company. Source

Ted D. Kellner nominates Board candidates to AIM ImmunoTech Inc (AIM)

Key Summary: On August 14, 2024, Mr. Kellner announced plans to nominate himself, Mr. Deutsch, and Mr. Chioini for the 2024 board elections. On September 3, he formally submitted this notice and indicated an additional nominee would be added. On September 11, he updated the notice to include Mr. Sweeney as a nominee.

Market Cap: $19 million | AIM ImmunoTech Inc., an immuno-pharma company, focuses on the research and development of therapeutics to treat multiple types of cancers, viral diseases, and immune-deficiency disorders in the United States. 

Update

• On August 14, 2024, Mr. Kellner stated that he intends to submit a notice to nominate himself, Mr. Deutsch, and Mr. Chioini for election to the Company’s board of directors at the 2024 annual meeting of stockholders well ahead of the September 13, 2024 deadline. Source
• On September 3, 2024, Mr. Kellner submitted to the Company notice of his intent to nominate himself, Mr. Deutsch and Mr. Chioini for election to the board at the 2024 AGM. Mr. Kellner also notified the Company that he would supplement the Notice no later than September 13, 2024 to identify an additional highly qualified and independent nominee. Source
• On September 11, 2024, Mr. Kellner updated his previous notice to the Company, adding Mr. Sweeney as a nominee alongside himself, Mr. Deutsch, and Mr. Chioini for election to the board of directors at the 2024 Annual Meeting of stockholders. Source

Background

•   On August 7, 2023, Ted D. Kellner (who, together with Todd Deutsch, owns 6.5%) stated that he had delivered a notice to the Company regarding his intent to nominate himself, Mr. Chioini, and Mr. Deutsch for election to the board at the 2023 AGM. Source
•    On August 23, 2023, the Company rejected Mr. Kellner's Notice. On August 25, Mr. Kellner sued in the Delaware Court of Chancery seeking declarations that the bylaw amendments are unlawful and accuses directors of breaching fiduciary duties. He requested a quick trial before the 2023 Annual Meeting. Source
•   On October 13, 2023, Ted D. Kellner filed proxy materials seeking support for his nominees. Source
• On November 1, 2023, Ted D. Kellner filed proxy materials seeking support for his nominees.
•   On December 28, 2023, the Delaware Court of Chancery invalidated four advance notice bylaw provisions that had been adopted by the Board in March 2023, favoring Mr. Kellner. However, the Court found that Mr. Kellner's notice of nominations did not comply with some of the Company's remaining advance notice provisions. Mr. Kellner disagreed with the Court's opinion on this matter and pursued an expedited appeal while seeking to halt the Company's Annual Meeting during the appeal. AIM had announced that it would disregard Kellner Group's nominations, but stockholders still had the option to "withhold" votes for incumbent directors. Mr. Kellner had intended to pursue his appeal and seek relief for a stockholder vote on Kellner Group nominees, even if the Annual Meeting proceeded as scheduled.
• At the AGM held on January 5, 2024, shareholders have elected all four of the Company’s directors.  But two directors received more than 40% withheld votes. Source

Past

In July 2022, Jonathan Jorgl and his nominees, Robert L. Chioini and Michael Rice, collectively known as the AIM Stockholder Full Value Committee, notified AIM ImmunoTech Inc of their intention to nominate Chioini and Rice for the company's board, aiming to replace Directors William Mitchell and Stewart Appelrouth. The committee reiterated its commitment to this cause in August, and later, in September, filed proxy materials seeking support for their nominees. Disagreements arose as AIM considered the nomination notice invalid due to non-compliance with the company's bylaws. Jorgl sued AIM in Delaware's Chancery Court seeking validation of the nomination. In October, AIM's claims against the committee were dismissed, and the committee continued to voice its concerns, especially after discovering alarming statements made by incumbent directors during the ongoing legal proceedings. In November, the Chancery Court denied Jorgl's plea for a preliminary injunction. Although the committee disagreed with this decision, they opted against proceeding with a trial or seeking an appeal. Finally, at the AGM held on November 3, 2022, all three company's director nominees were elected to the Board.