4/29/2029

Shareholder Activism in Asia Drives Global Total to Record High

Nikkei Asia (04/29/29) Shikata, Masayuki

Activist shareholders had their busiest year on record in 2024, with the Asia-Pacific region making up a fifth of campaigns worldwide, pushing some companies higher in the stock market and spurring others to consider going private. The worldwide tally of activist campaigns rose by six to 258, up by half from three years earlier, according to data from financial advisory Lazard. Campaigns in the Asia-Pacific tripled over that period to 57, growing about 30% on the year. Japan accounted for more than 60% of the regional total with 37, an all-time high. Activity is picking up this year as well in the run-up to general shareholders meetings in June. South Korea saw 14 campaigns, a jump of 10 from 2023. Critics say South Korean conglomerates are often controlled by minority investors that care too little about other shareholders. Australia and Hong Kong saw increases of one activist campaign each. North America made up half the global total, down from 60% in 2022 and 85% in 2014. Europe had 62 campaigns last year. The upswing in Japan has been fueled by the push for corporate governance reform since 2013 and the Tokyo Stock Exchange's 2023 call for companies to be more mindful of their share prices. The bourse has encouraged corporations to focus less on share buybacks and dividends than on steps for long-term growth, such as capital spending and the sale of unprofitable businesses. Demands for capital allocation to improve return on investment accounted for 51% of activist activity in Japan last year, significantly higher than the five-year average of 32%. U.S.-based Dalton Investments called on Japanese snack maker Ezaki Glico (2206) to amend its articles of incorporation to allow shareholder returns to be decided by investors as well, not just the board of directors. Though the proposal was rejected, it won more than 40% support, and Glico itself put forward a similar measure that was approved at the following general shareholders meeting in March. U.K.-based Palliser Capital took a stake last year in developer Tokyo Tatemono (8804) and argued that more efficient use of its capital, such as selling a cross-held stake in peer Hulic, would boost corporate value. Activist investors are increasingly seeking to lock in unrealized gains from rising land prices, reaping quick profits from property sales that can go toward dividends. Companies in the Tokyo Stock Exchange's broad Topix index had 25.88 trillion yen ($181 billion at current rates) in unrealized gains on property holdings at the end of March 2024, up about 20% from four years earlier. After buying into Mitsui Fudosan (8801) in 2024, U.S.-based Elliott Investment Management this year took a stake in Sumitomo Realty & Development (8830) and is expected to push for the developer to sell real estate holdings. This month, Dalton sent a letter to Fuji Media Holdings (4676), parent of Fuji Television, calling for it to spin off its real estate business and replace its board of directors. Activist campaigns have sparked share price rallies at some companies. Shares of elevator maker Fujitec (6406) were up roughly 80% from March 2023, when it dismissed Takakazu Uchiyama -- a member of the founding family -- as chairman under pressure from Oasis Management. The rise in demands from activists "creates a sense of tension among management, including at companies that don't receive such proposals," said Masatoshi Kikuchi, chief equity strategist at Mizuho Securities. Previously tight cross-shareholdings are being unwound, and reasonable proposals from minority investors are more likely to garner support from foreign shareholders. Some companies are going private to shield themselves from perceived pressure. Investments by buyout funds targeting mature companies in the Asia-Pacific were the highest in three years in 2024, according to Deloitte Touche Tohmatsu. Toyota Industries (6201) is considering going this route after facing pressure from investment funds last year to take steps such as dissolving a parent-child listing with a subsidiary and buying back more shares. Toyota Industries holds a 9% stake in Toyota Motor (7203). The automaker "may have proposed having [Toyota Industries] go private as a precautionary measure," said a source at an investment bank.

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10/29/2025

PepsiCo Overhauls Corporate Branding to Broaden Focus Beyond Pepsi

Marketing Dive (10/29/25) Adams, Peter

PepsiCo (PEP) unveiled its first new corporate brand identity in nearly 25 years to better emphasize the breadth and diversity of its global food and beverage portfolio, according to a press release. Central to the updated logo is a white “P” surrounded by an earthy orange symbol for food and grain, a blue drop of water and a leaf-like green shape symbolizing the Pep+ sustainability program. The iconography sits above a deeper green slash representing a smile tied to PepsiCo’s new tagline: “Food. Drinks. Smiles.” The changes mark a break from past PepsiCo visual identities, which have hewn closer to the branding for flagship soda Pepsi. The Quaker and Frito-Lay owner is getting a makeover as it comes under greater pressure to shake up the business amid growth struggles. PepsiCo’s rebrand introduces a lot of changes, but one immediately noticeable aspect of the overhaul is the attempt to shift emphasis away from Pepsi. Prior PepsiCo logos have echoed the marketer’s flagship soda brand, with blue-and-red color schemes and different iterations of the beverage’s signature globe icon. Those elements are mostly absent from the latest update, which instead puts equal emphasis on food and grains, drinks and water and the Pep+ sustainability program, all underscored by a smile. In the announcement, PepsiCo noted that only 21% of consumers can identify a brand under its umbrella that isn’t Pepsi, signaling an awareness problem for a company that owns over 500 brands. PepsiCo’s previous logo, which shows an all-caps, bold blue “PEPSICO” sitting under a globe, was implemented in 2001. “Our new identity boldly reflects who we are in 2025: a company with expansive reach, aiming for positive impact across the globe and an unmatched family of beloved food and drink brands,” said PepsiCo CEO Ramon Laguarta. The color palette of the new identity is rooted in the “real world,” with earthier, more muted tones, while a custom typeface is done in lowercase letters to convey approachability, according to PepsiCo. The focus on smiles is meant to signal PepsiCo’s “obsession with consumers,” which the company wants to reach during more occasions, said Jane Wakely, chief consumer and marketing officer and chief growth officer of PepsiCo International Foods, in the announcement. PepsiCo’s refreshed look will begin appearing on packaging early next year, Wakely said, and phased in over time to different markets. It is already present on the marketer’s social media and digital channels, including the PepsiCo corporate website. In an open letter, Laguarta went into greater detail on some of the initiatives the rebrand will help reinforce, including propping up high-growth brands like Lay’s and Tostitos; stripping artificial ingredients and colors out of products like Doritos and Gatorade (in a response to the Make America Healthy Again movement); and repositioning brands for different occasions and to reach consumers through new channels, including away from home. Internally, PepsiCo has been streamlining operations and investing more in artificial intelligence for “precision and impact.” Laguarta has been under pressure to shake things up amid declining sales and market share for some of PepsiCo's brands. Activist investor Elliott Investment Management in September took out a nearly $4 billion stake in PepsiCo with the goal of getting the food and beverage giant to shed low-performing offerings and revamp aspects of its bottling network. The full-sugar, or blue can, variant of Pepsi has dropped from No. 2 by volume in the U.S. to fourth place in just a few years' time, per Beverage Digest data. PepsiCo earlier this year acquired Poppi, a disruptor in the booming prebiotic soda space, for nearly $2 billion. The better-for-you brand received a callout in the corporate rebranding announcement, as did Mexican-American food label Siete, another recent acquisition.

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10/28/2025

Opinion: Nelson Peltz's Lowball Bid for Janus Henderson Is Pretty Cheeky

Bloomberg (10/28/25) Hughes, Chris

A takeover offer with a meager 10% premium is the sort of thing that usually merits adjectives like “derisory,” suggests Bloomberg columnist Chris Hughes. "But Nelson Peltz wants us to think that this skinny top-up in his bid for fund manager Janus Henderson Group Plc is 'significant.' The renowned activist may be able to get away with paying a premium lower than the conventional 30% to 40% here — but surely not this cheeky," asserts Hughes. Janus Henderson was formed from the 2017 combination between US-listed Janus and London peer Henderson. As an active asset manager, it’s challenged by passive funds with low fees on one side and alternative-asset managers promising high performance on the other. It has only recently started to show a turnaround from the client outflows that followed its founding merger. But it’s making progress under Chief Executive Officer Ali Dibadj. The influence of Peltz’s Trian Fund Management LP, a major shareholder since 2020, is doubtless another factor. Janus Henderson has diversified its fund products and has reported repeat net inflows lately. Trian’s $46-a-share offer for the 80% it doesn’t own — valuing the target at about $7 billion — isn’t just a slim premium on the pre-bid price. It’s only roughly 5% above the stock’s three-month average. The shares were trading just cents below the price being dangled as recently as this month. The average analyst target for the company was nearly $48 before Trian’s interest emerged, with $55 at the top of the range. "Trian’s boast that the non-binding offer is 56% above the stock’s April low also merits short shrift," according to Hughes. The nadir of President Donald Trump’s tariff turmoil is a mightily convenient yardstick, he argues. About 80 stocks in the S&P 500 are up more than that percentage since then. Meanwhile, Peltz favorably compares his bid’s worth relative to Janus Henderson’s trailing profit. Such juxtapositions are academic for a company in far better shape than it was. The mooted price is 7.2 times expected 2026 earnings before interest, tax, depreciation and amortization, far less than the 9.4 times for the average transaction in this sector, say analysts at Morgan Stanley. "For sure, Trian doesn’t need to be overgenerous," admits Hughes. "Its existing holding shortens the path to outright control. That stake is a deterrent to counterbidders. Plus equity markets are strong right now. Janus Henderson has been trading close to its all-time high. Against that backdrop, a 20% premium, more like $50 a share, would be far easier for Peltz to sell. As Morgan Stanley researchers point out, other notable fund-manager deals have snagged premiums at that level or higher." There are useful parallels outside the industry, too. Saudi Arabia’s sovereign wealth fund already owned a stake in Electronic Arts Inc. (EA) when it bid for the video-game maker, albeit a smaller one than Peltz’s in Janus Henderson. That deal was struck at a 25% premium last month on an undisturbed share price not far off its high. A sweetened offer would force the Janus Henderson committee evaluating the proposal to more seriously weigh the risks of not doing a deal. As Trian says, with justification, this is a stock that’s highly sensitive to the markets, and markets have run up a long way. Above all, deep challenges persist for those occupying the investment industry’s squeezed middle between the likes of Blackrock Inc. (BLK) and Blackstone Inc. (BX). Does Peltz have a magic solution? His precise strategy isn’t clear. Trian says its target would benefit from investment in people and technology that’s better conducted outside the public markets, without giving details. Buyout firm and AI expert General Catalyst Group Management is partnering on the approach. The options could include further diversifying into alternative investments, say by offering more private-market strategies. Then there’s the question of Peltz’s eventual exit. Could a refashioned Janus Henderson return to the stock market on a higher valuation than it commands now? Or could it become something more alluring to a larger asset manager? Perhaps the chances of finding a buyer would increase if the business diverted cash flow to investment for a while without worrying about its stock price. "These would become Peltz’s problems if he succeeds," concludes Hughes. "Given the difficulty of attracting takeover bids for active managers, Janus Henderson shareholders will be tempted to let him take them on — but they should demand a more 'significant' premium than this."

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10/24/2025

For Beleaguered Southwest, ‘Everything is on the Table’ — Even Long-haul International

Dallas Morning News (10/24/25) Parker, Jordan

Southwest Airlines (LUV) CEO Bob Jordan has repeatedly said the Dallas-based air carrier is considering long-haul international flights. Southwest Airlines could be on the cusp of making the most monumental change of its 54-year history. The carrier has rolled back some of its most popular policies as it positions itself to take on other major U.S. carriers. Now it may be eyeing an expansion to long-haul flights to Europe for the first time. Southwest officials said in August that the airline was talking to the unions representing its pilots and flight attendants about expanding its international route network beyond Mexico and the Caribbean. Southwest’s longest route is currently Phoenix to Honolulu, about 2,900 miles. This year, Southwest has also launched international airline agreements with Iceland Air, China Airlines, and EVA Air in Taiwan, further signaling its intention to explore international opportunities. Yet that may be changing, with Southwest flirting with expanding its global reach at a time when rival carriers are beefing up their international schedules. American Airlines (AAL) is set to add flights from DFW International Airport to Athens, Greece, and Zurich next summer, in addition to extending service to Buenos Aires, Argentina. Meanwhile, Delta Air Lines (DAL) is expanding service to destinations in Portugal, Italy, Spain, and France, as well as the islands Sardinia and Malta next summer. And United Airlines (UAL) added routes from its Newark hub to Italy, Croatia, Scotland and Spain. Bob Jordan, Southwest’s chief executive, has not been shy in talking about the chances of his carrier embarking on an international expansion, saying at a summit last month that “everything is on the table.” “I wouldn’t be talking about things like lounges, premium and long-haul international if it wasn’t a real subject under evaluation at Southwest Airlines,” Jordan said at the North Dallas Chamber of Commerce’s annual aviation breakfast last week. ”If we were to decide that we want to fly long-haul international, it would require a different aircraft. The 737 cannot do that. It would require negotiations with our pilots and flight attendants. It would require learning how to do catering. It would require getting slots in the airport’s we want to fly to in Europe, as an example." Jordan indirectly hinted at two possible Southwest destinations if it were to fly to Europe. “The number one long-haul destination in the world to the United States is London, number two is Paris,” Jordan said at the breakfast. “So you take the top 10 (long-haul markets), most of those are western Europe. It would be logical if we were to fly long-haul international that you would want to pick off the top markets, right?” Even still, a number of analysts have doubts that international routes beckon for the airline. “The key thing here is just because an airline says they’re going to explore doing something doesn’t mean they’re actually going to do that thing,” said Henry Harteveldt, founder of Atmosphere Research Group. “It’s easy to talk about exploring long-haul flying,” he said, suggesting that Elliott Investment Management — the activist investor that’s forced major change at Southwest — may be pressuring the airline to do more global travel. “There are a lot of questions [that] have to be answered before an airline pulls the trigger to go long-haul,” Harteveldt added. “For more than 50 years, they’ve been a primarily domestic airline. They’ve been an airline that flies to Mexico, the Caribbean and Central America, but nobody right now thinks of Southwest as being a long-haul airline, and that’s a big change to make in the consumer’s mindset,” he said. “I’m not sure that the Southwest brand footprint, in most of its customers’ minds, extends to flying to Europe.” Amid the whirlwind of recent changes, “Southwest could find itself in a high-risk, high-return situation,” said Usha Haley, a business professor at Wichita State University. “Historically, Southwest has focused on short-haul, high-frequency routes with fast aircraft turnarounds and low operational costs,” she said. “Long-haul international flights introduce complexities including larger aircraft, training international crew, overnight stays, and higher regulatory compliance, all of which could hurt Southwest’s cost advantages and endanger its brand name. As sometimes happens, Southwest may find that it has bitten off more than it can chew.” Southwest has almost exclusively operated the Boeing 737 family of aircraft since its beginning. The carrier currently operates 810 aircraft: 334 Boeing 737-700 aircraft, 203 Boeing 737-800 aircraft and 273 Boeing 737 MAX 8 aircraft. The airline has credited its single-aircraft policy with efficiency and scheduling simplicity over airlines that fly multiple airplanes from different manufacturers. In order to fly long-haul international routes, Southwest would likely need to diversify its fleet. The company’s single-aircraft model limits its flying, since the 737 MAX has a maximum range of about 3,500 miles. “In Southwest’s case, they have 737 MAX jets and they can potentially modify some of their MAX 8 jets to fly long-haul by adding a fuel tank,” said Harteveldt. “Flying the 737 MAX 8 could allow Southwest, conceivably, to fly from airports in the Northeast U.S. to destinations in Northern Europe.” Still, Southwest’s transition into a more global player won’t come easy or quickly. Analysts said that Southwest will need to overhaul its operation and product if it wants to enter the long-haul market. They questioned how Southwest would implement such routes given that it has no major international hubs, and no premium loyalty products enjoyed by its rivals — such as lounges and top-end offerings offered to premium and business travelers. Clark Johns, director of the Alton Aviation Consultancy, said Southwest would need to examine how an international expansion would impact its business model. “There is potential for them to ‘win’ customers who utilize Southwest for their domestic travel today, but then are required to split their wallet with other airlines when it comes to long-haul travel,” Johns said. Sixteen months have passed since Elliott acquired a nearly $2 billion stake in Southwest, allowing it to turn up the pressure on leadership. When the firm burst onto the scene, it came with a mandate for Southwest management: increase profit by overhauling its strategy. Southwest made major policy moves like ending open seating, announcing overnight flights, and charging for checked baggage, among other changes. When all is said and done, the Elliott engagement could be a catalyst behind why Southwest is considering yet another dramatic strategy shift. "So there are a lot of factors that Southwest would have to consider, and they may conclude that again, the economics of flying long-haul aren’t as compelling as remaining a primarily North American-focused airline,” said Harteveldt. “And guess what? That’s okay. Because if Southwest believes it can actually make more money with a North American network, then that is the message it has to tell Elliott and its other investors.” With its missteps in the rearview mirror but external pressure mounting to hasten its modernization, an international expansion could give Southwest access to profitable routes. As post-COVID international travel picks up, there’s money to be made for savvy carriers. Collectively, U.S. airlines made a $1.8 billion net profit from international operations, according to U.S. Department of Transportation statistics from the second quarter — a jump from the comparable year-ago quarter. “When it comes to airfares, travelers could win big if Southwest enters the long-haul market,” said Julian Kheel, the CEO of Points Path, a company that helps travelers utilize rewards points. “More competition on routes to Europe or South America would likely mean lower ticket prices and better award availability across the board,” she said, while warning that Southwest “would have a lot of work to do to match the international flight experience passengers expect from global airlines.” But he added that “more competition is always a win for travelers, and if Southwest pushes other carriers to lower fares or improve service, consumers will benefit in the long run.”

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10/23/2025

In South Korea a Corporate-governance Revolution is Under Way

The Economist (10/23/25)

In a year when most stock markets have impressed, South Korea’s has dropped jaws. In 2025 the KOSPI 200 index has risen by 69% (in won) to a record high, trouncing the 15% notched by America’s S&P 500. Artificial-intelligence hype has helped, especially for big chipmakers such as Samsung Electronics (005930) and SK Hynix (000660). But the main reason is a state-backed effort to “value up” the country’s firms — i.e., improve their wretched corporate governance and eradicate the “Korea discount” on their stocks. Lately the value-up drive, begun in early 2024, has got new impetus. Since Lee Jae-myung became president in June, parliament has twice amended the Commercial Act, which regulates public companies. Managers now have a fiduciary duty to shareholders (previously their duty was to their firms alone). The law shifts power towards minority investors and away from the families that dominate companies, for instance, by mandating electronic shareholder meetings and tweaking voting procedures. Another wave is expected by year’s end. Firms will probably be obliged to retire “treasury shares,” hoards of stock that dilute external shareholders and can be used to fend off activist investors. Hundreds of firms have already said they will nix such shares. Listed firms have more than doubled share buy-backs since 2023. Activists are newly emboldened. For over a decade Infovine (115130), a software-maker, had shrugged off criticism of its skimpy dividends and hoarding of treasury shares. But an activist campaign started in 2024 has borne fruit. Infovine has bought back shares and upped its dividend by a third — and its share price has tripled this year. Investors have encouraged KB Financial, the parent of South Korea’s biggest bank, to cut back on foreign acquisitions and return cash to shareholders, says Ben Preston of Orbis, an investment firm with shares in KB Financial. The stock has more than doubled since the start of 2024. The transformation is far from complete. Convoluted ownership structures that favor majority shareholders (usually families) are still widespread. The management of Samsung C&T, the de facto holding company for South Korea’s biggest conglomerate, last year squelched an activist-led proposal for higher dividends. (The family of Samsung’s chairman holds sway over two-fifths of Samsung C&T’s shares.) Unlike in Japan, where companies’ stakes in one another are being steadily unwound, in South Korea progress has been scant. Despite this year’s momentum, the Korea discount is intact. Over half the members of the KOSPI 200 trade below the book value of their assets, against 31% in Japan’s Nikkei 225 and 4% in the S&P 500 (see chart). And the broader market is still nearly 25% short of the president’s arbitrary “KOSPI 5,000” target.

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10/19/2025

Japanese Family Businesses Are Facing a Succession Crisis. That Is Fueling a Private Equity Boom

CNBC (10/19/25) Shan, Lee Ying

Japan Inc. is confronting a ticking demographic time bomb, and private equity players are racing to defuse it. Across the country, ageing business owners are facing a dual reckoning: heirs not interested in taking over the family business, and steep inheritance taxes. For many family businesses, rooted in the tradition of handing over the reins to the next generation, a once-taboo option is fast becoming a viable alternative: selling to private equity. According to Bain & Co., Japan’s private equity market has now topped 3 trillion yen ($20 billion) in annual deal value for four consecutive years. On a year-to-date basis, deal activity in Japan has jumped over 30% to $29.19 billion year on year, data from PitchBook shows. Much of this deal flow is being driven by a massive wave of family-owned businesses putting themselves on the bloc, as aging founders face succession challenges and heavy inheritance taxes, according to industry experts. Jun Tsusaka, CEO of Japanese investment firm Nippon Sangyo Suishin Kiko, cites the example of a 61-year-old who recently tasked Tsusaka to sell his business. “They’re at an age where they’re saying: ‘I’ve worked hard. But my children do not want to take over my business,’” he said. Japan levies the world’s steepest inheritance taxes, going as high as 55% on large estates, according to Tax Foundation. That high tax puts even the heirs in a bind. The tax bill must be settled within 10 months of death, often compelling heirs of privately held companies to offload the assets fast to raise cash, making selling to private equity an increasingly attractive option. Over 90% of Japanese small and medium enterprises are family-owned, and more than 65% of Japan’s buyout deals now stem from succession cases, according to data provided by investment management firm Neuberger Berman. By 2025, about 1.27 million SME owners aged 70 or older will have no successor — about one-third of all Japanese companies, according to a World Economic Forum report. Kyle Walters, a private equity analyst at PitchBook, said succession was a powerful domestic driver for deal flow. “The lack of succession and Japan’s aging population are undoubtedly critical factors for the growth of PE activity in the country,” he told CNBC. “Many sellers are looking at PE as a real possibility because there are few other options.” Ten years ago, selling to foreign funds was unthinkable. Traditionally, CEOs did not see selling out as an option, said Manoj Purush, Reed Smith’s corporate partner specializing in mergers and acquisitions. “Then it turned into: okay, we can consider selling because we need investors — but those investors were local. Then they realized actually, we can start considering foreign investors.” That cultural shift has given global players legitimacy, as successful turnarounds by foreign behemoths like KKR, Carlyle and Bain eased fears that PE would gut companies, he added. For example, KKR bought an 80% stake in Panasonic in 2013, renamed it to PHC Holdings, which then went public in 2021. “They’ve seen foreigners come in, and it has worked,” said Purush. That cultural shift, has even driven some younger founders to sell amid chronic labor shortages and the inability to attract professional management — a trend intensified by the “Employment Ice Age” generation gap, said Ryo Ohira, Neuberger Berman’s head of East Asia. The “Employment Ice Age” refers to the period between early 1990s and early 2000s when Japan’s job market entered a deep slump, following the collapse of an economic bubble, hollowing out the mid-career talent pool. That shortage of seasoned professionals has left SMEs with few viable successors or external managers, deepening today’s succession and leadership crisis. The Japanese government’s regulatory reforms have also aided its private equity boom, said Jim Verbeeten, a partner at Bain & Co. “If you explain why it’s all so great today, it goes back to 2015–16,” he said. The government had introduced sweeping reforms: mandatory external directors and pressure from the Tokyo Stock Exchange to improve return on equity. Beyond succession, corporate carve-outs are fueling deals as Japanese conglomerates, under regulatory pressure, strive to free up capital and boost return on equity. Activist investors have also been pushing underperforming boards to divest assets or go private, according to industry veterans.

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10/14/2025

Trump's Tylenol Claims Limit M&A Options for Parent Company Kenvue

Reuters (10/14/25) Summerville, Abigail; Herbst-Bayliss, Svea

Kenvue (KVUE) was already having a painful year before U.S. President Donald Trump and his health secretary got involved. Starboard Value took aim at the company about a year ago, forcing the Band-Aid and Benadryl maker to settle a potentially costly and time-consuming fight by naming the hedge fund's CEO, Jeffrey Smith, and two other directors to the board in March. Other unhappy investors weren't mollified by the board refreshment, including Daniel Loeb's hedge fund Third Point, which quietly built its own stake in April. In mid-July, Kenvue's board ousted its CEO after already replacing its chief financial officer and launched a strategic review of its operations, which sources say could include a sale or breakup of the company that had been spun off from health care conglomerate Johnson & Johnson (JNJ) in 2023. Then news leaked on September 5 of a report that Health Secretary Robert F. Kennedy, Jr. planned to release linking its popular painkiller Tylenol to autism, driving shares down 9% that day. Arguably the biggest blow came on September 22, when Trump told people to stop taking Tylenol. Flanked by Kennedy at a rare Roosevelt Room press conference, he told America: "It's not good." The Food and Drug Administration, part of Kennedy's Department of Health and Human Services, that same day said it was slapping a new warning on Tylenol labels reflecting safety concerns that its active ingredient, acetaminophen, could cause attention-deficit/hyperactivity disorder and autism in children whose mothers took it during pregnancy. That claim was refuted by influential medical groups and dismissed in federal court for its lack of scientific evidence. The Trump administration's statements have cost Kenvue some $10 billion in market value and prompted investors to steer clear of the company, for now, analysts and investors said. The presidential spotlight created a public relations firestorm for Kenvue, which has a market value of roughly $30 billion. It could create new legal dangers and complicate any strategic plans for the company, which also owns Neutrogena, Listerine and Zyrtec among several popular household products. Plaintiffs are appealing a federal judge's 2024 dismissal of lawsuits bundled into multi-district litigation that alleged Tylenol or generic versions caused autism. The judge ruled that they failed to support their conclusions with scientific evidence. "In 25 years or so doing this work, I’ve never seen the president, the HHS secretary, and the FDA commissioner join hands in common cause with the plaintiffs’ bar and use the bully pulpit of the White House to promote the interests of a legal case,” said Bob Chlopak, managing partner at Vision360 Partners, a firm that specializes in crisis communications. Kenvue's strategic review committee is considering a broad range of options, including a sale of the company or sale or spin-off of its struggling skin health & beauty unit, which contains household brands like Neutrogena, Aveeno, and Clean & Clear, people familiar with the company's thinking said. Finding a buyer for the full company would be much harder now with several dealmakers saying the company is “unsellable” until all Tylenol claims are resolved because buyers would worry about litigation risk and a prolonged drop in sales at one of the biggest brands. “In our view, the company’s current structure makes (a full sale) unlikely, but a more focused OTC and skin care business could eventually become a target,” a July HSBC research note said. Other consumer giants including Kellogg and Kraft Heinz (KHC) have opted for separation to create more streamlined businesses. Last month, Kraft Heinz announced it will separate into two independent, publicly traded companies: Global Taste Elevation and North American Grocery. There is already interest in Neutrogena and Aveeno, sources said, but so far Kenvue has only been willing to part with its non-core skin health & beauty brands. The skin health & beauty unit could be worth $6 billion to $9 billion, analysts say, despite the segment's falling revenue. That's a large bite for any company or private equity firm, but some have turnaround ideas for brands like Neutrogena, which Kenvue has poured advertising dollars into this year, sources said. Neutrogena has struggled to win over Gen Z consumers and lost market share to competitors like L'Oreal's CeraVe, which in 2021 usurped the title of the No. 1 recommended skin care brand by dermatologists. If Kenvue were to sell or spin the skin health & beauty unit, the remaining company might be worse off without profitable segments to balance potential losses from its Tylenol litigation. Ashley Keller, who represents families in the class action dismissed last year, submitted the Trump administration's latest actions as supporting evidence in an appeal before the 2nd U.S. Circuit Court of Appeals in Manhattan. Kenvue could face substantial damages if the appeals court sides with plaintiffs, worrying investors. The appellate court is using a legal standard that allows it to overturn the dismissal only if the panel of judges finds the prior ruling to be "plain error," unreasonable, or completely out of bounds," lawyers and analysts said. A ruling is expected by the end of March. The solution to the Tylenol problem might just be time, analysts said, but board committees typically try to wrap up strategic reviews in a matter of months.

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10/10/2025

Post-Proxy Season Trends in Corporate Activism: A Strategic Recalibration

Nasdaq (10/10/25)

The 2025 proxy season revealed significant shifts in shareholder engagement and governance practices. For board members, understanding these developments is essential to effectively address evolving investor expectations, regulatory complexity, and the rise in off-cycle activism. The 2025 season saw governance fundamentals reclaim the spotlight. Proposals to eliminate supermajority voting and declassify boards gained momentum, while social and environmental proposals saw waning support — unless directly tied to business strategy and material long-term value creation. This strategic link is essential, reflecting investor priorities around sustainable growth and resilience over short-term gains. The surge in reincorporation proposals required shareholders to scrutinize state law provisions and the fine print of charters and bylaws, underscoring the importance of understanding fiduciary duties as defined across different states. Trend has contributed to the renewed investor focus on governance fundamentals — and boards should evolve with intention. The traditional seasonality of activism is changing. “This was one of the most active seasons for campaigns,” notes Avinash Mehrotra, Co-Head of Americas M&A and Global Head of Activism & Raid Defense at Goldman Sachs. He cites earlier launches, faster settlements, and intensified withhold efforts. Campaigns are increasingly led by new and occasional activists, often surfacing six to nine months before nomination windows. Boards must proactively monitor vulnerabilities year-round to close governance gaps and address shareholder concerns around underperformance. Activists often target and exploit pressure points like capital return, business focus, and M&A activity. Mehrotra advised regular self-assessments against these top activist demands to determine if any adjustments to business strategy are warranted. First-time activism from traditionally long-only investors has also emerged as a key theme. In the first half of 2025, one in three high impact campaigns involved a first-time activist. Subtle shifts in investor behavior, such as ownership patterns, derivative activity, and tone can signal activist intent well before a public campaign. Shareholder activism is not just a reaction to poor stock performance but an evolving investor strategy in response to global economic conditions, market volatility, and sector-specific opportunities. Direct, continuous engagement with investors to better understand their perspectives can help surface concerns before they escalate. “The most effective boards have already thought through scenarios and can clearly explain their path to shareholders,” noted Keith. Ultimately, board preparedness is no longer seasonal—to successfully forestall activist intentions, preparedness is a year-round discipline. Changes in SEC regulations, particularly around 13D and 13G filings, have transformed shareholder engagement. The risk of being reclassified from passive to active has made many asset managers more cautious in company interactions. This shift is especially evident in sensitive situations, such as failed say-on-pay votes or activist pressure. Companies are rethinking how they engage with large shareholders and respond to emerging threats. A key takeaway from the 2025 season: proactive board engagement and strategic composition are essential. Boards should maintain regular investor dialogue, with a focus on capital allocation and strategic alignment. “Go beyond board meetings,” advises Mehrotra. “Not every director needs to engage with investors regularly, but a subset should lead that dialogue.” Transparency and context around board decisions reduces vulnerability to activist narratives.

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