Activists Gonna Activate: Hedge Funds Send Letters To Acorda, Taubman Centers Boards

Last week was big for activist investors, with Barington Capital Group and NuOrion Partners toppling Avon Products, Inc. AVP’s CEO, Nelson Peltz and Bill Ackman forcing out Mondelez International Inc MDLZ’s CEO, and Ackman’s Pershing Square inciting a drop in Automatic Data Processing ADP.

But, continuing an unusually busy year for activists, it seems things were just heating up.

Two more campaigns launched Monday, with Scopia Capital Management taking on Acorda Therapeutics Inc ACOR and Land and Buildings going after Taubman Centers, Inc. TCO.

Related Link: What Happens To A Stock When An Activist Liquidates A Position?

Scopia’s Gentle Request

As a long-term, 17-percent owner of Acorda, Scopia wrote to the board expressing admiration but urging review of strategic alternatives, including a sale.

“In 2018, the business will revert to burning cash with a levered balance sheet and no clear timeline to return to profitability,” Scopia wrote, bemoaning the pharmaceutical’s loss in Ampyra litigation and current dependence on Inbrija’s 2018 launch. “These are treacherous waters.”

Acorda is poised to secure a strong selling price, Scopia supposed, as its assets were more valuable than those of the recently acquired Cynapsus and Neuroderm.

Land And Buildings’ Beef

With sharper language and a more direct tone, Land and Buildings accused Taubman CEO and Chairman Bobby Taubman of “bullying” and misleading the board and shareholders.

“At this point the only thing worth hearing would be a mea culpa from management — but after 25 years we are not holding our breath that one might be uttered,” the firm wrote in a letter. “It is time for accountability at Taubman. It is time for change.”

Specifically, Land and Buildings demanded the removal of ineffective management, outlined criteria for the appointment of three new directors and threatened democratic deposition of Taubman family members from the board provided demands go unmet. Co-founder Jonathan Litt has campaigned against Taubman leadership since October.

A Precedent Of Success

Activist investors seeking to redirect targeted firms and unlock shareholder value occasionally launch their campaigns through such letters to management. The public correspondences outline problems and propose solutions, generally in the form of leadership changes or asset sales.

Recently, some efforts have proven effective.

What began with a letter from Marcato Capital resulted in the eventual retirement of Buffalo Wild Wings BWLD’s CEO Sally Smith. Earlier in the year, Bob Evans Farms Inc BOBE caved to Sandell Asset Management demands to sell its chain restaurant, and Whole Foods Market, Inc. WFM sold itself to Amazon.com, Inc. AMZN on pressure from Jana Partners.

Activist investments don’t always go so well, though, with many intransigent boards successfully warding off pressure and prompting shareholders to abandon their strategic stakes.

As yet, a number of firms are still holding off the advances of activist investors, with:

• Deckers Outdoor Corp DECK resisting Marcato;
• Procter & Gamble Co PG resisting Nelson Peltz;
• Barnes & Noble, Inc. BKS resisting Sandell Asset Management;
• Hain Celestial Group Inc HAIN resisting Engaged Capital;
• and Dillard’s, Inc. DDS resisting by Marcato, Greenlight Capital and Snow Park Capital Partners.